Actually I think I figured out my own question. They weren't talking difference between the 8GB and 32GB, because besides storage space the only difference is the headphones with voice control.

They were talking difference between the 2nd Gen touches (8 and 16GB) and the 3rd gen touches. The 8GB in stores now is the 3rd gen with faster processor - but 6 hours less play time.

Think I'm going with the 8GB and tossing in a gift card for some games. Though I see MacMall does have a 2nd Gen 16GB for $220.. hrm...

Damn it, Apple! You need a 16GB for $225! Or, 16GB for $199 and then the 32GB!

Hey I'm an F'n Jerk!