The damage is already done. The most important thing is to not power the thing up before it's completely dry. If you do, various short-circuits inside will occur from the minerals and salts in the water - even distilled or bottled water. If you're iPod or cellphone get dunked, and you're really, really lucky, the mineral content will be low enough that there won't be shorts. Or, the circuit board will be fortuitously designed in such a way that the board won't short to the power circuit, but modern electronics use a lot of surface-mounted components, and for the most part such shorts are inevitable.
Some people advocate soaking/washing with absolute (anhydrous) alcohol - 100% ethanol immediately, before the board is re-powered. That will displace the water inside as well as get rid of the salts that will potentially cause the short circuits.
Nothing to lose by trying that now, but it's likely that the shorts that occured immediately while the thing was on and wet, or the shorts that occured when it was powered up subsequently, have fried some of the components for good.
Taking a water-damaged portable electronic device into the dealer and saying "it just quit working, dunno why - I want a new one" is a very, very common ploy with pocket-type portable electronics like iPods or cellphones. The manufacturers are wise to that. If you pull the battery out of your cellphone, you'll see a little white dot in the battery compartment somewhere. This little dot is a water-sensor and will turn red if it gets even a little wet. Virtually all portable electronic devices have those, including the iPod. You can actually buy replacement dots on the internet, but they aren't just in the battery compartment, they're also in various other places deeper inside. On the Ipod, there is one at the base of the headphone jack and the dealer can usually quickly see that with just a brief glance. The dealer will sooner-or-later (on disassembly) find that it's been dunked and deny any warranty service. Doesn't hurt to try, but if you take it in and innocently protest water-damage, they will usually immediately, but at least ultimately, know that you're lying.