I have had problems with the pods but in both cases it was a HEAVY downpour. Around me (Lovely NYC) the roads are crap. Water puddles everywhere and when there are cars or trucks on both sides sending water out at a 45 deg angle, your pods do get soaked. I have a 1G so there is no possibility of re-installing the orignal carb covers, like you can on the 2G. I was going to fabricate something but all my fabricating tools are 1 hour away...yeah that's it, it's not just because I don't have "mad skillz", it's cause they are an hour away
Anywho, I bought covers (pre-filters) for them at Outerwears
http://www.outerwears.com/index.taf and they work great. You just need to email them with the type of bike and the fact that they are K&N pods. Haven't had a problem since. Most people don't seem to experience the problem though, so maybe you should try without first.