I have read that Apple pressures developers to requre the latest version of iOS if at all possible. Is there any way to find out for sure? These are my rules, so far:
1. THIS IS THE MOST IMPORTANT THING! Whenever you do update, first sync your .ipas (your ~/Music/iTunes/Mobile Applications folder) to another folder. They all have versions in the name, so if you don't "Mirror" you should be fine, new files won't overwrite old because the version # in the name will be different. THIS IS THE MOST IMPORTANT THING! I didn't do that in the past, my Time Machine backups either were poorly set up or there's a problem with Time Machine and Mobile Applications folder or the backups don't go back far enough. I think it's a problem with Time Machine, because, frankly, I had some much older files that had been changed backed up, but not some much newer . The short version is, some apps that used to work on my iPod Touch I'll never see again - the files have your Apple ID in them. Apple's indefensible on this score, in my opinion. If you don't feel like setting up a Sync, just literally copy every file (or list it by date, descending, and copy the top X files) to your backup folder. Then to save time, when it tells you there are duplicates, say don't replace and apply this to all files. If you know AppleScript you could create an AppleScript to do this before you hit the Download All Free Updates button.
1A. If you feel like you're already screwed (yes, your apps work now, but if you have to restore, you're screwed) get DiskAid for your OS. It's quite cheap and irreplaceable. Get all your apps to disk (vs. iTunes). Make that the basis of your backup folder.
2. Having done the above (backed up your old applications files) you now should "Download All Free Updates"). Why? To give you something intermediate to back up. Yes, it will delete your current apps quite often and replace them with unworkable ones. It will also update things over time to just at the edge of usability on your device.
3. It wastes a great deal of time if you do #1 and #2 out of order, so don't.
4. To find out what apps have become bad, you look at your ipod touch or iphone in itunes and look at sync apps. The ones iTunes won't import to your device are unchecked after the sync. You can color them red in your folder, and color your good apps green and if there are white apps, check if they imported or not, and color them accordingly.
5. If you need to restore, restore, then simply add the apps you really need to iTunes (it'll copy them) from your backup folder.
6. Apple really should have old apps to download, especially if you paid for them. That's customer abuse, and frankly, they don't have the whip hand here. Most old devices aren't on warranty anyway, so the incentive to not jailbreak them and just go get whatever old app you used to use is pretty much nil.