^2012, we are at the end of the world dammit, data no longer actually sits on a hard drive you own which is in your physical vicinity and you are possessive about it being there
using an iDevice liberates you from data being tied to the device, because all your content can be stored on the iCloud, and the store saves all your purchases including IAP
plus yes, it fails horribly as a PMP, say if you want to listen to songs or watch podcasts while travelling, the iPhone is totally not the piece, small screen for videos, low battery life for long periods of usage... some PMPs offer days of battery life, if you are not planning to depend on the iStore for the content (music, podcasts (vids and sounds) and apps), maybe something with a larger screen and more battery life is better for you
if you want to store all your photos and songs on the PMP, and not change the content ever then ofc you are never gonna have enough space, if you let iTunes handle it, newer content replaces older content, and stuff you have already gone through gets thrown out automatically, so its a steady stream of content that disappears as and when you consume it
point is basically if you have prolems managing with 8GB of data, you will have prolems managing with any limited amount of data
but I guess OP already knows whats good about the iPod and why he wanna buy it, lol at everyone who tried to convince him to buy an android phone
an iDevice is fundamentally different from all other devices and its use is restricted to its own circle of devices and content, so if you are not comfortable with it or dont know about it, its cool that droids or something else woiks for you, but speculating how someone else should use their devices, or why buying a particular device is "total waste" doesnt really help anyone, it just allows you to voice your opinion