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The Classic will hold more music, but the navigation is more awkward, because it's a smaller screen, and there's only the wheel to control things. With the touch screen on the iPod Touch, it's a lot easier to pick what you want to play, and even though it's easier to edit playlists on the PC, it is possible to do it on the Touch - not on the Classic.
If you like to pick an album out from the album art view, or want to be able to enter a few letters from the piece you're trying to find, then you'd be better off with the Touch.
How important those things are will depend on how you like to listen to your music and pick out what to play.
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