My iPod is an 8GB iPod, and I can't figure out what is taking up so much space! I only have 6 apps, 136 photos, and 77 songs. It says I have used up 5.0GB with only 1.5GB available.
If you go to Settings->General->Usage, you should be able to see what is taking up your storage space. Also keep in mind that about 1.5 of your 8gb is reserved for system files, cache, etc.