When I read 16GB, I was like "come again?". But Apple is right for thinking that there are two ways to offer iPods - one is for people who don't want to sync, and want to carry their entire library in their pockets. The second is people who are fine or prefer switching the content every time it needs a recharge. (22 hours of music is roughly 3GB)
The first iPod was introduced in October of 2001. In it was a 5GB hard drive that held 1000 songs. And it changed the music industry. In those days, I was spitting on iPods for their lack of beauty.
To me, a portable device like this one is a great way to share creativity or things of interest with other people. And that means content that changes from day to day.
Above all, it's a freaking touchscreen iPod with coverflow! iPod Touch is a thing of beauty.