I copied ryan97128 exactly on his set up except there was no need for the battery and I am not experienced enough to put in extra LEDs, so no cool blue hue. For how to break into an Ipod Shuffle, there was this instructable from technochicken which was most helpful.
To avoid redundance, I will assume that you will be able to follow ryan97128 on how to set up the circuit board from the controller and have the Ipod taken apart and ready to go.
Total cost for this project was about $40 for me, the only things I needed to buy were a used Ipod shuffle off eBay and a connector cable for it (you won't be able to use the included stand in my design).
Step 1: Materials
Original NES controller
used Ipod Shuffle, must be 2nd or 3rd gen (the more used the cheaper)
Ipod shuffle connector cable, not a stand (see picture)
hot glue gun
20W soldering iron and solder
swiss army knife (any multi-tool will do)
needle nose pliers
Step 2: Prep Ipod
Deftly remove the buttons by sliding a flat edge (like a small knife) underneath them and prying upwards. You are trying to preserve the two sides of the button which are very small circuit lines on either side of the button (see second picture).
Also, fold out the headphone port like it is in the second pic, it will make it easier to fit in the controller
Do not remove the metal covering around the buttons, this will help you not touch stuff.
Make sure the Ipod is switched to On and Shuffle before you remove the casing