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There really is no set amount of space, but I would suggest at least 1.5GB to be able to install future iOS updates and to record video.
 
iOS manages space well. Computers usually need about 10% free, but I went right up to the limit on my iPhone, and didn't become unstable. Albeit, it was a little limited when I couldn't use any more storage space...
 
The iPod Touch does not have a hard disk - it uses a solid state disk (SSD) which has no moving parts.

Absolutely true -- and yet, absolutely useless within the context of this discussion.

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Then same question except with a SSD

If you are interested in installing your iOS upgrades over-the-air (as opposed to using iTunes to manage them for you), then you'll probably need to leave at least 1GB free (actually, slightly more) in order to accommodate the file download.
 
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