I would recommend the cheaper iPod Touch 5th gen without the camera on the back.
The 4th gen is just ancient, and you'll like the new shell they use better. The buttons are easier to use too.
When you use Amazon MP3, you can either stream the music, or you download the songs and it stays within the app and all gets deleted when you delete the app.
I have never used iTunes for syncing an iOS device, only back when you had to use it to do the upgrades.
And yeah, gift cards will work fine.
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