It depends on how much you are going to put on the touch.
2G have a faster processor, volume buttons on the side, microphone, speaker, OS2.0 pre-installed (£5.99/$10 extra to pay on 1g).
If you think that the extra capacity will be more benefit, get the 1G. If you can't live without the extra 2G features then get the 2G. In the end, only you can make that decision.