Not assuming what you'll use it for but here's my experience...
I had the 1g 16 gig touch. Then I bought a 16gig iPhone. Figured I'd keep the iPod Touch because my 5yr old son plays games on it when I drive. Using headphones with the thing made it a royal pain. I ended up just eBaying the iPod for $200 and I just let him use my iPhone now in the car.
I've considered buying him his own 2g iPod because of the speaker, but really, it's not worth the $$$ when he can just use my phone.
I'd go with the 2g iPod touch and pay the $90. What I have found (and this is just me) that I play music ALL the time on my iPhone through it's built in speaker. Getting ready for work in the morning etc, while hanging a ceiling fan the other day, just all the time. Yes, I could turn on my iMac or my stereo and appleTV downstairs, but the convenience of having that built in speaker in the iPhone is SOOOO nice.
Good luck, either way you'll be happy.