Well... the difference between the 1st generation iPod Touch and the 3rd generation iPod Touch is SLIGHTLY different. The cases will STILL WORK!!! (you are relieved :) ) The difference between the two generations is that the 3rd generation is slightly slimmer that the 1st. The thing is the cases made for the 1st generations might me a little big... (by a few centimeters!)
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The I Pod touch third generation does not have a camera and the fourth generation has a camera. The fourth generation is also a lot more expensive...