Many folks use headphones with the POD for quiet practice or tone building and get on just fine.  As always, the sound in headphones can be a bit dry due to the lack of natural room acoustics but the Amp models help compensate for this with features like early relections on the cabinets and Reverb and delay can be used to create 'space' where required.

In general good quality headphones sound OK with the pod.  Be aware though that the recommendation is for High Impedance headphones but most standard headphones are lower impedance (see the FAQ herehttp://line6.com/support/docs/DOC-4695) and some people have reported less than stellar sound with some headphones. 

More discusson on headphones  for the POD in the search here -->  http://line6.com/support/search.jspa?resultTypes=&dateRange=all&peopleEnabled=false&q=headphones&containerType=&container=&containerName=pod+hd&username=&rankBy=relevance&numResults=15 .  Also checkout the 'more like this' links to the right.