My IPod touch 3rd gen. 8GB doesn't have any of the capabilities a "3rd gen." has.  If I would have known this I might have purchased a 16 GB or 32 GB instead.  Why did apple make such a product?  Can I do something about this?

Please help.

That's because it's not actually a 3G iPod Touch. It's a 2G unit. Apple never sold 3G 8 GB iPod Touches, but some third party resellers erronenously reffered to them as so. 
B-rock

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