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If I'm planning to use it within a few hours or the next day, I just put it to sleep. If I don't plan to use it for more than 24 hours, I shut it down.

Now, some people will say shutting down and then booting it back up will use a lot of the battery. Whilst this occurred a lot with 1.1.1 and 1.1.2 firmware, the problem appears to have been fixed long ago (I haven't had the problem in some nine or so months). In fact, I booted up my iPod this morning and the amount of battery used was negligible.
 
It's up for debate, I don't think it really matters. Turning your iPod on from shutdown drains some battery, leaving it in sleep drains battery slighty, so it probably comes close to evening out. I leave mine on 24/7, and get great battery life.
 
I like to completely shut my Touch down every few days, I try to do this while it is plugged in and charging and then I start it up while it is still plugged in. I shut it down just in case there are any programs running in the background and also to clear the cache. I don't know for sure it works but I've had good luck doing this and I hardly ever have Safari or any Apps crash.

Eric
 
usually, i put mine to sleep unless i plan to use it for a while. not shutting it down can cause SERIOUS lag, and overall frustration. thats one thing i'm really meh about: not having a shut down iPod function on the timer. it just has sleep. but i'd suggest shutting it down atleast twice, three times a week before you go to sleep. no harm in it, really.
 
Now, some people will say shutting down and then booting it back up will use a lot of the battery. Whilst this occurred a lot with 1.1.1 and 1.1.2 firmware, the problem appears to have been fixed long ago

That actually never happened:

When turned it off, the iPhone's/iPod Touch's battery icon said it had more battery life remaining than it actually did, and then on reboot it would show the real battery life (which was considerably less all along).

All they did recently was make the OS sense the battery life more accurately all the time, which is nice ;).
 
I've owned my iPod Touch 2G since launch weekend and have only turned it off once, for fun. Sleep all the way.
 
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