The thing is, any apparatus, can get filled up and run out of space.
So as the "user" you need to maintain your device. Which means, periodically going through it and deleting things that are not needed/no longer used/ or old... or download/upload it onto the computer. Thereby creating more "room" on your iPod or device. ALSO, by downloading or uploading it to your computer, you are thereby, making a "back up" copy of what is on your iPod. Which is always wise. So that, you don't mistakenly loose... what you have. And, putting it on the computer is easier and more compatible... IF you have a Mac computer. Because, the Mac computer, has a software, in which you can "mirror" what you have on the iTouch, and it is therefore, on your computer and the iTouch and it can be "managed" that way, as well.
8g is enough. Or 16g at most.
My kids have TONS of things, on their 8g iTouch.
My kids have an 8g. Which they got from my Husband, when he upgraded to a newer model.
With any tech device... the "user" has to maintain it.
And you teach your kid that.
Just like, having a room full of toys. Then it gets overly full of toys. So then, as the "user" the Mommy or the kids periodically goes through ALL that junk... and tosses it, in order to make more room, in that room.
Same thing, for any tech device or computer.
Otherwise, anything... can get filled up and run out of space.
My daughter who is 9 and my son who is 5, knows that. They maintain their iTouch very well and are tech savvy. They know, to get rid of stuff/delete it if it is no longer wanted or used. OR they will tell my Husband, to delete things for them and to load other things on it... and my Husband has their menu/apps on his computer too which can be managed that way too. Because, we have a Mac computer.