Yup, the hardware differences I'm ok with, so I guess the main issue is we just have to see if the apps we want to use perform adequately?
Also, I thought I saw that iOS 5 will be compatible with the itouch 3g:
http://www.apple.com/ios/ios5/features.html (bottom of the page)
Or is that only the "late 2009 32 & 64 GB" 3G units?
If so, that's the single most annoying reason that Apple gets the "Evil" modifier in my book...slip-streaming incompatible hardware changes without changing the model name and burying or outright concealing that info.