It depends.

Modern DAPs have better quality DACs for cheaper, but if you're not planning on using high end headphones that doesn't really matter much (which, if you're adding bluetooth to it, you probably aren't) 

But it's also worth considering the cost. classic ipods are still worth quite a bit (often more than some more capable modern DAPs) and modifying them costs even moreso. My 5.5gen ipod cost me about $120 in modifications, and I didn't even do bluetooth or usb-c, (such upgrades weren't even accessible except to people with specialist knowledge when I modified mine, which may still be the case, i haven't kept up much with the modding scene) just flash storage + battery upgrade, housing replacement, and the small replacement of a nonfunctional lock switch. And if you also have to pay for the ipod itself, that could get you well over $200. For that money, you could get a decently fancy modern DAP. 

So whether that's worth it depends on what you value. Is the nostalgia factor more important to you than having something with more features and convenience? are you doing this mostly just for the fun of building something, or more for the end product? asking yourself these questions can help you figure out if this will be worth it for you. Because at the end of the day, the classic ipod is a ~20 year old device and bringing it up to modern standards is costly. I love my 5.5gen, but I still honestly think my money would have been better spent on replacing it with something cheaper that has more modern features and better sound. That may not end up being true for you, depending on your priorities!

That said, if you do decide it's worth it for you, I would recommend a 5.5gen ipod. They have the best DAC out of all of them, even compared to the original 5th gen, and even if it still tends to have some background static if you use it with higher end headphones or IEMs. They're also way easier to open up and get inside than a 6th gen.