our two kids have got ipod touches for Christmas. I tried to get them separate Apple ID accounts but it said because we had the same email address we could only have the one Apple ID. Is there a way to have two separate Apple IDs on the same email address? If not how is the best way to keep their itunes card money separate?
No - an Apple ID is a unique string, so you can't enter the same letters for two as the first reserves that "email" and prevents a second account.
You can have alases in one email account so that mails to more than one address get delivered to the same account. Google allows this with punctuation and arbitrary letters after a + in the email name. You can also enter punctuation like periods so if your email is RobynWhatever, mail to Robyn.Whatever also gets delivered to the first gmail account.
The only way is to have separate email account, you cannot use the same email for different account.
If I understand correctly, you want to have control over those accounts and receive the monthly purchased email in one account. You can setup 2 email accounts with forwarding service which will send all the mail from their account to your main email account.
iTunes accounts are tied to an Apple ID so if you want to keep their accounts separate you'll need two IDs. And as IDs are not allowed to have the same email address you'll need separate ones there as well.
Thinking ahead I would recommend the third option. In a few years they will want/need their own mail address anyway.