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Is there much of a difference between these two that would make me want to get the newer version? Or will the older version suffice, especially in light of the price difference?
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new one, 3rd gen:
-smaller unit, different buttons/arrangement. As for the scroll wheel, the 1st gen had movable plastic ring, but 2nd+3rd gen went to the "touchwheel" which works like the mousepads on laptops. The compusa $229 model is a 2nd gen iPod.
-supports USB 2.0 (&1.1), not just firewire
-dock connector which supports dock + some other accessories
-supports 2.x firmware which has:
-on-the-go playlists (create playlist on iPod, rather than being limited to making them on the PC)
-additional games + alarm clock, some other minor utilities
but
- worse battery life (~20%?)
I have the old one, the only feature I really wish I had from the new one is the OTG playlist. The old iPod is already small enough to fit comfortably in my pants pocket, and I can live without the other new features. I won't upgrade until I run out of space or they put out some new generation with much better battery life.
If you don't have a fireware port on your PC the added cost of a card might bring the prices close enough for you to want to spring for the 3rd gen.