I suggest waiting. If you're not going to use it for music or video (or as an internet connected mini computer).
There a lot of nice timewaster games for a buck or so, but only a couple real standouts that would hold their own on other consoles. They have been mentioned in this thread (Rolando, Fieldrunners, simcity, etc)
Unless you need to play those games right now, you could wait a year till capacities go up (and prices down) and then you could perhaps use one for more than just gaming. plus, many more (worthwhile) games will be around then.
for question 2, all games work with ipod touch. but there are a few that use a mic. you would need to get a headset with mic to play them on the Touch. but, really, it's no big deal. none of the good games make use of that now.