I can answer a few of your questions.
- Yes, the Kindle for iPhone app will work on the
iPod Touch (I have it on mine)
- I haven't tried downloading library books with it. You may have to check with your local library to see if they support the iPod Touch. If one of the other reading apps like Stanza or eReader can handle the library books, you're probably good to go.
- I have a 16GB 1st generation iPod touch with 527 songs on it at present. I don't keep a lot of video on it. I'll download it (TV shows mostly), watch it an delete it, so I haven't run into a space problem. eBooks are very small files. One of the largest books I have is Stephen King's "The Stand" which is 3.28 MB but most I have are less than .5 MB
- I don not believe you can read books from the Sony store on your Touch
- The only major differences that I'm aware of between the 1st and 2nd iPod Touches is the 2nd generation is a bit slimmer and has a physical volume control dial (1st generation colume control is via the touch screen).
Hopefully someone with more answers will jump in.
