I agree entirely with iHelix. The iPod touch makes for a great pocket computer, and I've had a 2nd gen 8GB model (I now wish I'd gone for a larger capacity one) since early 2009 and have used it everyday since I bought it, just as much now as I did early on (possibly more now, as I've constantly refined my selection of apps to the very best available for my needs, meaning my iTouch has become ever more useful to me).
While the iPod touch can play music, that is certainly not a good reason to buy it, and the music I have on it is limited to about 12 hours in total of tracks taking a total of just 378MB (because I used 64kbps AAC-HE compression, fine for listening to on a bus or train, but certainly not hi-fi quality). I've also filled 282MB with 438 photos, thanks to iTunes stupid photo "optimisation" process (those same 438 photos take 27MB on my PC as standard JPEGs, meaning iTunes made them over ten times the size for some bizarre reason). I don't have any videos stored on it now as they burn up space very quickly.
Most of the 7GB user space on my 8GB model is used by apps and especially the files I use with them. The 'Encyclopedia' app is a text-only copy of Wikipedia that is a year and a half old and is bundled with a quite flawed viewer which uses up around 2GB in total. A further gig or so in total is used by copies of maps I have downloaded for use with three quite different offline map apps so I can view them without a net connection. In effect I am making up for the lack of almost always available internet access, by carrying around the content I want on my iPod touch instead.
In total I have 112 apps installed (according to iTunes) but with the exception of the offline wikipedia and map apps, they probably take only about 2GB in total.
I'd say that for most people, 8GB (7GB of which is available for use) is more than enough if your primary purpose is apps, unless like me you decide to use those apps to carry a significant chunk of online content with you. If I had a 16GB iTouch, I could easily fill that with further content (such as an alternative more recent offline Wikipedia app which takes nearly 7GB), plus more detailed and wider coverage maps which could eat up a few more gigs.
Gamers might want more than 8GB as some of the premium games take in the region of 100-300MB each (and a rare few even more, such as Myst which takes about 500MB), but even gamers should be able to install a decent variety of top games in 8GB, though the higher-spec 3rd gen 32GB and 64GB models may be preferred because of their faster processors.
Most non-gaming apps take very little space so 8GB is more than enough for any number of them, with the exception being those which are designed to allow local access to lots of downloaded data like I am using.