1st generation iPod touch
I got my first generation iPod touch through a "points redeem" program so technically, it's sort of free. I actually wanted to hold off for the 2nd gen but my father was persistent and got me that for my birthday. It's still one of my best buds ever, and while upgrading to 3.0 gave a bit of new life to it, it's ultimately not worth paying 10 dollars for.
The only major features that first generation iPod touch users will benefit from are:
1) Push notification support (multi-tasking-ish) and App Store account settings.
2) Configurable Spotlight search...
3) Search everywhere.
4) More complete artist information on lock screen mini-player
5) Specific scrubbing
6) Safari Autofill
7) Cut, Copy and Paste
So yeah, the updates you'll get to notice are simply too subtle, so I think it's either upgrade to the next iPod touch that's probably gonna oversee release in September or October, or ignore it (and the apps along with it). 2.0 was a great upgrade since it granted access to apps, but this one? Maybe not... unless you didn't upgrade to 2.0, that is.
2nd generation iPod touch
The second generation benefits much more than the first generation iPod touch due to the fact that it has Bluetooth. Yeah, that's actually a bit of a distinctive line because what the 3.0 firmware does to it is that it "unlocks" the Bluetooth option so you can listen to music- with (stereo) Bluetooth headsets! Not only that, it also lets the iPod touch go head to head with an iPhone or similar generation iPod touch in several games that utilize the Peer to Peer thing (that or you can download apps that let you share files over Bluetooth as well).
In addition, if you buy any headphones that have a mic, you can also use the gorgeous Voice Recorder that comes with the firmware. Of course, you also get the aforementioned other features, but isn't the upgrade so much more enticing with the new Bluetooth features?
If you're not into Bluetooth headsets, don't upgrade, but if you are, this is a no-brainer.
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