I'd like to ask what you want??? Sound, music, or additional features??
I use my iTouch as an all around personal assistant--tons of apps that help me keep track of stuff. Plus a few gigs of music just for fun. Store photos there too
Then I have my Nano for music, nothing but music, and couple it with a Tomahawk for true portability.
If you're usig either for just music, I'd go with theNano only because it's easier to pair with a small amp--Nano, Basso T3, etc. If you want additional "goodies" you may want to consider the iTouch ampless then get all the apps available on the iTunes sites