i gave my ipod touch to my wife when i got the droid. right now there are 3.5 gigs of space left on my sd card, i'm running the stock 2.0.1 and have not experienced any slow down in my phone. i plug the cassetteplayer jack into the droid along with the car charger and it works like a charm. You dont need an ipod touch unless you want to drive around with 160 gigs of music. you could drive coast to coast to coast and not listen to all of that.