I was torn between the Classic and the iPod Touch. I ended up with an iPod Touch (8GB - it's a downgrade from the 16GB in my iPhone) because I felt the 2nd generation iPod Touch had a lot of offer expecially with the built-in features - Nike+ and voice recording. And let's not fool ourselves. Apple is prepping for the iPod Touch and the iPhone platform in general for much more than music and games.
Now, 8GB verus 120GB in the Classic. I only considered the Classic because I felt Apple may not continue making it beyond this year. iPod Touch stands at 32GB. We can potentially see a 64GB model in late 2009. Apple might just say "okay, it's got enough storage for 95% of the users and we want to move everyone to the new iPhone/Touch platform".
And it's definitely a possibility considering it's Apple we're talking about. It'll force a wholesale upgrade.
And by then, the Classics, what's left of it, may see its value increase on Amazon or Ebay as a result. Plus, for folks who lamented the fact that Apple didn't increase the storage for the late-2008 Classics, there are now 240GB microdrives that'll fit in these iPods perfectly. Gizmodo has more info for you if you're interested.
Lots an awful lot of music, pictures, and movies. Thirty-six hours of audio and 6 hours (7 hours by some reviewers), it's any audiphile's dreams.
The iPod Touch is awesome but with the Classic's storage and upgradability, it's a music player in its own class. I just hope Apple won't truly turn it into a classic.