I was using a 2nd generation Nano. It was nice at the gym as you could navigate and change volume without looking at the device.
I recently bought a Touch, which I really love...but it's not as good for the gym. It's been great for travelling, checking e-mails, checking on to plane flights, reading the news, etc. I do use the Touch when doing cardio as I bought an entire season of First Hand from the Fuel network. I don't really use it for playlists as I did my Nano at the gym. I guess it's a give and take situation.