I have 3 Ipods.
2nd Gen Ipod Mini (4GB): used for mostly old songs that I like to listen to.
2nd Gen Ipod Nano (4GB): used for holding newer yet not essential music that I like (especially for trips).
New 16GB Ipod Touch: Holds only the newest songs that I love to listen to over and over again (and some songs that I can't live without). Also holds some movies/videos that I can watch over and over again (like Star Wars and Office Space).
I use my touch for everyday usage when hanging out with the friends (it's a showoff item for the most part for me). I use my nano for situations where I'm just hanging out by myself or in places where I'm doing nothing. My mini, I use in my car for travel as I don't really need to have a lot of music for the car. My mini never leaves my car while the touch and nano always are with me, depending on what I'm doing. I always update my ipods so that I only keep what I know I will listen to (like listening straight through the whole mini/nano/touch without skipping any songs). That is why I only need two 4GB ipods.
And fyi, I got my mini about 2 years ago, then got my nano a couple months ago in August when I ordered my SR MBP 17" Hi-Res laptop for school. Got instant rebate due to living in RI. Now just got the Ipod Touch for show and because I didn't want to have the hassle of dealing with any phone plans nor prepaid. I'm loving my ipods though.