Are we allowed to download Hebrew books to the ipod without paying for them, and is there a difference between sepharadic or ashkenaz customs in this case?
If the Hebrew books are available for free, then it is permitted, of course, to download the books. If the copyright is onwed, and no permission is given, some prohibited making compies of the book, even for personal reasons, whereas others prohibit it (in particular for purposes of Torah study). Those who are lenient have upon whom to rely, in particular for the purpose of Torah study. However, one should be stringent if possible.
To my knowledge, there is no difference between Sephardic or Ashkenazi custom concerning this question.