Dunnersfella: If it was for someone older, a 32GB iPod Touch would be ideal.
But if they're young, an 8GB device will allow them to keep almost everything they want, as well as the valuable lesson re: managing their data.
And re: buying on Apple's store...
I wouldn't buy new, as the 8GB is a loss-leader in most retail stores (JB's / Warehouse / Hardly Normal).
32GB / 64GB isn't picked on much in comparison... and engraving would be cool I suppose?
Good points. For someone young who may also damage it, then yes I guess an 8GB one is good option.