The iPod uses normal gbs just like any computer the software takes up about 200-300mb if memory serves, jailbreaking takes away another 500mb-1gb (for app storage) so yeah.. I had 7.3gb after jailbreakingIvan, YOU must be dense (since you decided to call me that earlier), it doesn't matter if the iPod comes with 16GB, without anything installed (including the OS) all 16GB is not available, the algorithm says so.
Little annoyance?
Keyboard lagging (still in 2.1)
Weired bug where cover art shows up in coverflow but not album view or when the song is playing
Battery life (if that counts as simple)