Firstly, I recommend you to read these threads to gain knowledge about what problem you're facing:
After you get some ideas, you should've realized by now that you've purchased and owned a true 2nd Gen iPod MC model - commonly advertised as 3rd Gen 8GB iPod around the globe.
If you need another evident, go to apple website and register your product with your iPod's serial number and you'll find out that you got a refurbished 2nd Gen iPod.
You should also watch Phil Schiller iPod touch presentation September 2009 from youtube, and you'll see 2 things stated by de_an777 :
Phil Schiller wiped out the $229 from the screen and changed it into $199 after he said that $199 is the price point that Apple would give to the 8GB model.
Then he brings up the iPod touch lineup, changed the price of the 8GB model, and doubled the capacity for the 16&32 GB models. He said," there are two other things about the 32&64 GB versions of the iPod touch, and I'll make sure you knew about it."
The first thing was those large capacity models would operate with up to 50% faster and the second was those models were added OpenGL ES 2.0 support.
But still, he did not say anything about upgrade to 8GB model, which means, it will be the same as the previous model (at that time, Apple hadn't classified iPods into generations yet).
These information were also released in apple press release 09/2009, basically telling you the same thing.
At this point, there's nothing you can do about it. However, in those 2 threads I've posted here, many people take action to the stores (either authorized or 3rd party ones) because they believe that they were misled during the time of the purchase. If you think you were misled too (such as, the seller said that all 3 3rd Gen models offers the same capability), I think you may take action too.
