Ya, would somebody mind explaining how it can be bad, unless if you are referring to the lack of space for applications to save things, then I don't have a clue as to what the problem could be.
i'm guessing he's drawing from the idea that having less than 10% disk space on your mac is not good because OS X caches and stores temp files a lot. If you don't have enough space, things start to go REALLY slow, you stress the drive more and worst case scenario things will grind to a halt
I dunno if this applies to iPods though but it could be argued since the Touch/iPhone run OS X. Meh..i dunno