Charlie, i'm assuming you have successfully completed the jailbreak, that amount of application storage is normal.
On the ipod touch, the area devoted to applications is a seperate partition of the hard drive. If you fill that space and need to increase the amount allocated to apps, you can do so. There are links to tutuorials on this forum if you search.
Just a friendly note too, the answer to the question you have asked has already been answered in several threads in this forum. Please do a serch in the future BEFORE creating a new thread.
