The bottom line is that Apple is a business. Apple is a business that wants to make money. They have a pretty damn good marketing plan and road map for products. Part of their road map (and success) is knowing that people that bought product "x" 6 months ago will buy the updated product "x" now. Even though it really adds no more functionality Apple knows that they have "fans" that are going to upgrade just because they feel that they have to have the latest Apple product. Even though that is not the only (or main) reason they do what they do, that is just how it works.
If Apple did not innovate and produce the best products out, they would not be able to do what they do. They do it because they can. Apple is not your mother, father or girlfriend and they don't owe you anything. You don't have to buy anything Apple makes if you don't want to.
All these people that whine about every little thing Apple does obviously has no business sense. All the people that whined about buying the iPhone when it came out and the price dropped happened.... pissed me off. I also bought the phone at the original price point and had no problem with what they did.
I am an investor in Apple. Whatever Apple does to make more money, makes me more money. Apple did not owe anyone a $100 store credit for what they did with the phone and it made me mad that my investment was going to take a hit because of it. The way I saw it, Apple dropped the price of the phone to where a lot more people would be able to buy it going into the xmas season. The more people that bought that phone meant the more money Apple would make and in return the more money I would make.
It is all about money people! Because Apple makes the profit that they do, they are able to bring us a lot of exciting products. If Apple were doing business the way the OP apparently would have it, we would be getting crap from Apple, if they were still in business at all! If Apple did business your way, there would be no Apple.
No one made you buy the iPod touch and no one is making you upgrade it. If 16GB was not enough for you before, then WHY THE HELL DID YOU BUY IT?!?!?!?!?!?