The recording is HD (720p) up to 30 frames per second with audio - but since both the audio and video are compressed using lossy algorithms, you might sometimes get significantly storage depending on the source.
In practice the iPhone 4 uses 4.8 GB / hour with the same HD (720p) up to 30 frames per second - but the few recording I've seen from the iPod touch have data rates about half as high (which use about half the space). My iPhone usually records between 2 and 10 Mbit/s. The lower end is for static, mostly black images and if things are moving or detailed, you get to the higher end of the range pretty easily.
You can make some test recordings and open them in QuickTime Player where the inspector window will show you the details for the video you are shooting. A little pen and paper or a spreadsheet will convince you of how much time you can expect to capture before your device runs out of space.