This has been the great divide for me on getting an iPod for myself or anyone in the family. Without closed captioning.. why would I buy Video media? I can't enjoy it with jnanacandra... so what's the point.
Granted.. as iLounge points out:
As of this writing, none of the iTunes-purchased videos we tested had any closed captioning information available. It is also unclear whether Apple will identify videos with closed captioning within the iTunes Store, or how this support will work with self-encoded content. Presumably third-party software developers will find a way to convert closed-captioning from other content sources to take advantage of this at some point as well.
The new lineup of iPod devices announced yesterday also includes the closed-captioning capability, and offers the ability to turn captions on or off within the “Video” settings. It is unknown at this point when firmware updates may be available to add this capabilities to existing devices like the Apple TV or iPhone.
I've downloaded a demo of an application called "MovCaptioner"
This app will let you manually caption any quicktime file. So I'm going to try that with a Podcast of mine and see how it works.