16gb iPod Touch does not hold 3,500 songs

Sort your songs in iTunes by Size..
If that column doesn't exist, add it.
Control-click on any column heading and check the Size option.
Now, sort by size and look at your files.
Most songs average about 1MB per minute - so a 3 minute song should be 3MB.
You may have ripped your songs in Apple Lossless Format, which are huge files in comparison.
Or, possibly you copied over AIFF files - the native format of CDs, which are ~10MB per minute.

Scott

PS - that number of 3500 is a rough estimate based on certain criteria.

As mentioned above, songs are usually ripped at 128 but lately they range up to about 320 for quality purposes. This will more than double the size of each song. Check to see the size of the individual files you put on there. Also check the size of that video. I like my videos ripped at a high quality and have a couple of 30 minute shows taking 2gigs.

iTunes prefs -> Advanced - Importing. What is is set to?
Change it to AAC 128 kbps.

What format were they?
Please add this info here for others to learn from.

Would restoring it help? Do you have any other stuff in there (for example, as a result of JB) that may not be "accounted for" by iTunes.

Here's what I'd try:

Turn off all syncing in iTunes (ie: uncheck syncing in Movies, Photos, etc.)

Do a full sync.

Go into Settings > General on the iPod Touch and select "Erase Content and settings"

Do a shutdown (hold top button for 10 seconds and slide to power off)

Power back on

Connect to iTunes and let it do any syncing

Do a restore from iTunes

Finally, re-check everything you want to sync and then do a final full sync

It may take a while depending on your volume, but at that point, you should have a "clean" setup.

NO, those steps are not necessary - the problem was songs either dragged in from a CD or ripped as lossless.
Big files vs small ones.

And that's what we thought... 😉