Gifts.com President & CEO William Lynch, who founded the site for IAC (IACI), will transition to HSN full-time as its EVP of marketing and content. He had previously been managing the HSN.com site, while also running Gifts.com.

The site, which also offers gift cards that can be redeemed at over 100 merchants, is now a 40-person operation.

Rapp has been with IAC since 2006 and, prior to joining the company, worked at the New York Times Company.

After a contentious battle with large shareholder Liberty Media, IAC is in the midst of separating itself into five publicly traded companies, expected to be completed in the third quarter, spinning off HSN, Ticketmaster, Interval International and LendingTree.

Left in the new IAC will be: Ask.com, Bloglines, Citysearch, CursorMania, Evite, Excite, IAC Advertising Solutions, InsiderPages, iWon, My Fun Cards, My Way, Popular Screensavers, Smiley Central, Vimeo, Webfetti and Zwinky, Match.com, ServiceMagic, Shoebuy.com, Entertainment Publications, ReserveAmerica; Pronto, Gifts.com, Green.com, Primal Ventures, InstantAction, BustedTees, CollegeHumor, GarageGames, RushmoreDrive.com, Very Short List, and 23/6.

Also included will IAC’s current investments in Active.com, Brightcove, FiLife, MerchantCircle, OpenTable, Points.com and SHOP Channel.

“I am beginning to think these people are insane. … Everything they cite is hogwash.”

That’s what is known as a classic Barry Diller, who can be relied on to come out with a good one when provoked.

In this case, the provocateur is Liberty Media’s John Malone (pictured on the right in this comic with Diller), whose company has headed to court to try to remove Diller from his job as chairman and CEO of IAC/InterActiveCorp.

As chronicled by the always deft Jessica Vascellaro of The Wall Street Journal today, the fight between the longtime partners is getting uglier still with–oh, let’s just admit it–totally confusing moves and countermoves about the fate of IAC and its subsidiaries.

Liberty has a giant stake in all of these entities and Diller, of course, has control of that stake. A recipe for mogul mud wrestling, if ever there was one.

But the fight is a serious one for a number of high-profile Web companies within IAC, which was being restructured to stop just this kind of fighting between Diller and Malone.

Just how Diller has gone about rejiggering it all, in complicated spin-offs in a way that allegedly undercuts Liberty’s control yet again, is what set the new round of tensions off.

Those sites embroiled in the fighting include: Expedia, TicketMaster, LendingTree and Ask.

As luck would have it, Diller will be interviewed onstage at the sixth edition of D: All Things Digital in late May, so there will be plenty to talk about!

The last time I interviewed him at the Monaco Media Forum last November, Diller let loose too, when he memorably scoffed at the $15 billion valuation for Facebook and Microsoft’s $240 million investment in the hot social network.

“If it was real money, it would be insane, but since it isn’t really, then why bother [worrying about it],” said Diller. “It doesn’t mean anything, it is a phantom, false valuation. Let them sell for $14 billion, $998 million, and then I’ll believe them.”

Here is a sampling of quotes from my one-on-one interview with him onstage at the Monaco Media Forum on Friday morning, taken from the not-so-audible audio of my Flip video camera. But you’ll get the idea of why Diller (pictured here) remains one of the more robust characters out there.

We began talking about the split of IAC into five parts, lopping off unrelated businesses, with the backdrop of a struggle he has been engaged in with Liberty Media’s John Malone.

Why do it? “We were being superficial managers,” said Diller. For example, of the mortgage business around LendingTree, he said: “I have little to no interest and that is not how I want to live my life.”

(Very few execs, I can assure you, will admit to rank corporate boredom about their businesses.)

But Diller was just getting started, taking shots at everything from the “dumb” Hollywood writers’ strike to the insanity of Facebook’s $15 billion valuation, as well as his own corporate shortcomings.

About the idea of synergy among his many properties, which he once touted effusively: “I still believe in synergy, but I call it natural law. They have to naturally fit into each other. The problem is that there was so much huffing and puffing to fit them together.”

(Again, it’s nice to hear someone admit when things just don’t work.)

Diller also took aim at Google, within a week of signing a big guaranteed ad deal with it for IAC’s Ask search network. “It has huge market share, and I don’t believe in the long run it will be able to keep up with it,” he said.

(In this, he is dead right, and the lack of search innovation at Google is troubling.)

While letting Yahoo off the hook for its management woes, Diller did marvel at Microsoft’s inability to compete in the online business. “Microsoft is a greater failure really, if you think about it, with a huge amount of capital and no real traction,” he said.

Diller also noted that the writers’ strike in Hollywood was silly, noting that the writers were striking over virtually nothing. “No one can solve an issue where there is no economic model yet,” he said. “Over the next five years, the market will develop, and at the end of that period, if the economic value is being created, [the studios] will sit in good faith and give [the writers] the money.”

(I am not so sure the writers should trust a bunch of execs who have shafted them so many times when it relates to technology, although Diller is correct that there are no real revenues to speak of yet.)

Lastly, he scoffed at the recent $15 billion valuation for Facebook and Microsoft’s $240 million investment in the hot social network, noting it was simply a move to thwart Google by the software giant.

“If it was real money, it would be insane, but since it isn’t really, then why bother [worrying about it],” said Diller. “It doesn’t mean anything, it is a phantom, false valuation. Let them sell for $14 billion, $998 million, and then I’ll believe them.”

Me too.

Please see this disclosure related to me and Google.