The chronological release of iPod touch from MacTracker posted by Wheat Williams seems to contain some contradictory information. From the data of wikipedia and http://support.apple.com/kb/HT1353, here's what I found :
September 2007: iPod touch 1st Generation in 8GB and 16GB sizes (iOS 3.1.3 maximum)
February 2008: iPod touch 1st Generation in 32GB (iOS 3.1.3 maximum)
September 2008: iPod touch 2nd Generation MB model in 8GB, 16GB and 32GB (iOS 4.2.1 maximum)
September 2009: iPod touch 3rd Generation in 32GB and 64GB (iOS 5.1.1 maximum)
September 2009: iPod touch 2nd Generation MC model in 8GB (iOS 4.2.1 maximum)
September 2010: iPod touch 4th Generation in 8GB, 32GB and 64GB (iOS 5.1.1 or latest)
October 2011: iPod touch 4th Generation in 8GB, 32GB and 64GB in white color (iOS 5.1.1 or latest)
iPod touch 3rd Gen itself were released in 32GB and 64GB capacity (with the same price of the 2nd Gen 16GB and 32GB) in September 2009 along with the another re-introduced 8GB iPod touch 2nd Gen (with lower price than the 2008-release of 2nd Gen 8GB)
@BadBoyz31, I've seen the video of the September 2009 release and indeed, Steve Jobs said that iPod touch 3G would be released only in 32 and 64 GB models. The 8GB models would only be re-released with a lower price, hence, logical deduction would classified the 8GB models to be re-released as a 2G model. So Badboyz31, you should've deducted that the 8GB MC models are 2G iPods/
Indeed, I must admit that many people would find that the 8GB 3rd Gen iPod to be quite a deal since Apple lowered its price in addition to a "confusion" as a result of blurry apple press release, misinformed stores, and a tight release date.
However, an iPod touch 2G MB models at that time were about 20-40% cheaper which offering the same capabilities as a iPod touch 2G MC model. Many people were interested to own the MC model because they think that the MC model would have received upgrades compared to the 2nd Gen MB model. However, ethically speaking, as an Authorized store, I think its mandatory to explain the difference between the 2G MC iPods and the 3G iPods.
Had they not give you what you were asking for, you have the rights to demand discount (75% would be fair considering your trouble), for a 4G iPods (I agreed with dOom_bah for this matter)