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I was happy with my 80 GB Classic as a pure iPod, but bought a 32 GB Touch to get some PDA-like capabilities (ideally I'd go for an iPhone, but apart from the price I'm already locked into a phone contract). I have too much music to fit it all on the Touch, but to be honest I don't listen to much of it at present, so I'm not finding that much of a problem.
I haven't made much use of the wireless, after the initial gosh-wow novelty period. It drains the battery pretty quickly, and I don't have much need of it. Your mileage may vary.
The display on the Touch is excellent, and certainly good enough for video, if you want to do that. You can watch video on the Classic, but with that tiny screen you probably wouldn't want to for long.
Where the Touch really scores is the functionality it provides above and beyond playing music and videos, including its programmability. Mine has pretty much replaced my old PDA, and keeps my calendar and address book, syncing with my Mac. It also securely remembers the many passwords I have to use in my job, has my shopping list, and is a general-purpose notepad. I even have a few games for it. The majority of the applications available via Apple's app store are rubbish, but there are gems to be found.
I suppose the one area where the Classic is still better, apart from the huge storage, is how it's controlled. I'll normally have shuffle mode enabled, so I'm listening to tracks at random, which means that I'll sometimes want to skip a track. With the Classic, I can do this without even removing it from my pocket, but with the Touch I need to: click the home button, use the on-screen slider to unlock, then touch the on-screen 'next track' button - and this can't realistically be done with it in your pocket. Mine doesn't even have physical volume controls (the later model does).
Oh, I nearly forgot: the Classic can also be used as a regular external disk, which can be handy if you work on a number of computers and often need to move large files around. I actually used my pre-Classic iPod once to do an emergency backup of a system. The Touch can't be used in this way.
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