This is pretty nuts, and seems to be corroborated by Canadian press. A young man on a flight accidentally dropped his iPod in the toilet, which was noticed later. This caused the flight to take an emergency landing, all the passengers to be interrogated by customs, the police and the bomb squad, and the plane searched for explosive devices. Oh dear.
The guy was flying to meet a World of Warcraft buddy, so the whole story is on their forum. Read it here.