Have their been big changes in the actual ipod,I see a lot advertised as 2nd generation, is that just a different version of software,or are their any other issues? Any other pitfalls.I am more than happy with 16g so I think I will buy one from the evilbay.

giant crabs with laser eyes.

2nd generation has improved software, yes. You can upgrade the first gen, but would have to pay for the software upgrade (£14 or so if I remember correctly). I think the 2nd gen also has minor hardware improvements, although can't recall specifics off the top of my head.

The 2g touch has a speaker, volume control buttons and bluetooth which the 1g doesn't have. The 3g has better CPU and GPU and voice control.

I have a 32gb 1g touch and I have seen no reason so far to upgrade. If the next generation came with a decent camera and GPS then I probably would.

http://en.wikipedia.org/wiki/Ipod_touch#Models

See here for info on each upgrade: http://buyersguide.macrumors.com/#iPod_touch

If you click on the date beside each release under iPod Touch, it will give you the info for that release.

I've been looking at these. The 32GB and 64GB 3rd generated models have a faster processor (800Mhz vs 533MHz) and more RAM than the 8GB version, which uses 2nd gen hardware; no difference for using as an ipod but applications will be a fair bit faster. The battery life is slightly reduced mind you, 30 hours of audio playback instead of 36 (IIRC). There isn't a 16GB version of the 3rd generation models.

I was looking at the 8GB version, but as I want it as a web browsing / app running device too I think I'm going to save a few more pennies and get a 32GB one after discovering the above.

there's a lot of buzz re a new one with video camera like the iPhone.

wait for the iPad Nano