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Depends. The 4G is an impressive little device, and the screen is awesome. But if you don't do much other than music and movies, keep yours.

If you do play games a good bit, the new ones are far better for that, and can run the nicer features of iOS 4. Size would be up to you to decide, although I feel like 4X the storage for $70 more is a better deal.
 
It depends what you expect from it. Right now I have my second generation (technically 3rd hen 8Gb) jailbroken with multitasking enabled and it runs alright. Right now I'm posting from it with Pandora playing music. It certainly doesn't run as nice as the new iPod. I would buy the newer one but I don't have any money lol (actually I just dont want to spend it)
 
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