Considering ipod touch over ipod classic, a few questions

Hello, I was hoping some of the current users of the iPod touch 2nd generation cna answer a few questions for me concerning the ipod touch, particularly those with an ipod classic as well.
I have had a 160 GB iPod classic for about a year. I had to take it back to be replaced twice because of harddrive failures. After I got the last new one I was fed up and decided to sell it on ebay. I have heard there were issues with the 80 and 160 GBs and the 120 is much better. There is a software upgrade that includes using the genious feature on your ipod for the 120's that was never available for the 160's. And since they discontinued the 160's, I'm assuming there was definately something wrong with that and Apple is too proud to admit to it, so they just roll with the 120's. So with that in mind I figured I'd sell my current 160 since the worst I could do is get the better model of the classic?
So then I started thinking, what about an iPod touch? Here are my concerns with goign with a touch over a classic...
The WiFi would be a huge benefit. I travel a lot and often don't feel like bringing my laptop with me. So when browsing the internet, I was wondering how it worked with Hotmail? With facebook? I know youtube works, but how does it work with other sites that are heavy with Adobe FlashPlayer, like Hulu.com? Or watch news clips from CNN or other things like that.
I use my ipod a lot in my car, and I don't think the touch screen would be very good for this to switch songs, anybody have any experience with this?
The flash drive is very appealing to me since I had 2 classics harddrive fail, but the small size is a concern, anybody have any opinions?
Can the touch be used in disk mode? Does it store full resolution files of photos?
I'm not big into games, but if I had a touch I know I would start.
Will I just get spoiled and wish it was an iPhone or something with 3G connection to the net?
Thanks for any help!

The 160GB Classic was essentially the 1st Generation Classic, it was replaced by the 2nd Generation 120GB Classic, which as you have pointed out has the Genius feature etc. With the exception of the most recent Shuffle, Apple always discontinues production of the previous generation, and it has nothing to do with Apple admitting to anything. I too had to go through 2 160s before the 3rd one worked correctly, it happens. Did the Classic you sold on eBay work correctly.
Thanks to changes by Microsoft you can now use the mail app on the Touch with a hotmail account.
There is a Facebook app in the iTunes App Store, I don't use it so I can't vouch for it but you can go to the Apps Store and read the reviews.
There is no Flash plugin available for the Touch and it is probably going to be 2010 before one is available so no you won't be able to use Hulu.com, etc.
It will be harder to switch songs on the Touch in your car unless you install an iPod connection kit (if your radio supports it, the will allow you to control the Touch from your radio/steering wheel/whatever.
If you have a large iTunes library and want it always with you then you need to lean towards the Classic. If you can live with swapping things around you can go with the Touch. A big advantage to the Touch is the plethora of applications that are available on the iTunes Store, many of them free.
You cannot currently use the Touch in disk mode (don't know if version 3.0, coming this summer will add this) and it does not store full resolution files of photos.
I had a first generation Touch which I purchased on the same day that I bought my 160GB Classic. I sold the Touch and moved to the iPhone, you get spoiled with 3G access.

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