Can you get by with an 8gb Touch?
Yep, based on my experience with a 3rd gen 32 gb, and on my recent local purchase of the 4th gen (this current model) in 8 gb capacity.
When using the old 32 gb, I found out that I barely used its greater storage capacity. (I don't haul around a lot of music or videos - I just transfer what I want to listen to/watch for each road trip or listening/viewing cycle using iTunes). Apps, I discovered, don't take up much space, even games and books don't take up much space, unless you want to haul substantially more of your whole collection with you. Amazon's Kindle app is esp. device friendly, since you can archive books you've finished back to Amazon instead of keeping them on the device. iTunes is a great way to manage what content you want to store on your home computer - which becomes a sort of large "docking device" - and what you want top take "to go."
As a netbook substitute, storage isn't even that important. I can check my bank balance, transfer funds and execute orders on a brokerage account, listen to radio on Pandora or Slacker, watch music videos (and a lot more ) on YouTube, Skype, stream Netflix, and do a whole lot of other stuff on the 8 gb just fine.
In fact in hindsight the only real reason for me getting the 32 gb version in the older edition was to get the faster processor. But in the current generation, ALL THE 4th GENERATION HARDWARE IS THE SAME, except only for memory.
Do keep in mind on the 8gb edition you give up about a gig to systems operations, leaving only 7 gb or so for your stuff. And you need to leave from for apps and their space. I probably wouldn't put more than 6 gb of music and videos on the 8gb version. The other editions also give up the same space, but proportionately it is a smaller "hit" to your storage.
The 8gb makes a nice intersection on my personal "cheapness" and "minimalist" curves. The price doesn't get into nose-bleed territory where I start to wonder whether a netbook would makes more sense, and it's inexpensive enough to subject to the toils of daily wear and tear - keeping it handy in an outside day pack pocket, instead of more safely stowed deep inside the pack.
The quality of the screen display. 
Simply put, this device has near-iPad screen quality in a 3.5" device. (960x640 resolution at 326 pixels per inch, vs. 1024x768 resolution at 132 pixels per inch).
That means you can get almost iPad quality video in approximately 3.6 ounces of device vs. 24 ounces of device; in a device that fits a shirt pocket vs. a device you need a separate bag for. In a device you can hold up as a reader vs. a device that tires your arms.
This Touch is VERY practical for reading NYTimes articles or USAToday articles in their reader applications, optimized for this size display (crisp, large type). VERY practical for browsing the regular on-line editions of most newspapers (tap once to fit a column to a screen with nice readable type). GREAT for YouTube since the YouTube app included with the device is optimized for delivering high def YouTube content - if available, HD videos are automatically preferred. GREAT for Netflix and Hulu Plus. GREAT for gmail and ok for Facebook (I am sure FB will make its dedicated app more user-friendly in the future).
Source : 
http://www.amazon.com/gp/product/B001FA1O0O/?tag=disintip-20