Most apps don't seem to use a huge amount of space. I was surprised by this. I think video is the biggest offender. I've watched exactly one movie on the Touch. It was a sort of interesting experience,but not something I'd want to do often except maybe on a long plane flight, etc.
I have 8 gig with all 4 desktop screens nearly filled with apps, and I still have LOTS of space left. I have some music, some podcasts too.