How do I know if my battery has decreased below 50% of total capacity ?

There's no specific answer to that question, it's simply a matter of you deciding when enough is enough. I can tell you though, that my iPod is far older than two years and still has a good running time with its original battery.

The difference between your experience and mine is probably down to just two things:

1. If you use your iPod for gaming etc. (in other words, the screen is on all the time and the processor is being worked very hard, playing the game and communicating with online players), then the battery will probably lose its oomph more quickly than mine, which is used mainly for playing music and the occasional App. In other words, each charge of the battery lasts me a longer time that it does for you. Therefore, the total number of charging cycles that my iPod's battery has had is lees than your battery. Rechargeable batteries can only be recharged so many times before they wear out.
2. The other possibility is simply that you have too many options set on or they are on for too long. Reduce the screen brightness if you can and do not have the screen "auto-lock" on for longer than you need. Turn off Bluetooth and Wi-Fi if you're not using them.

Try this Apple support article, which gives information about how to maximise battery life, http://www.apple.com/batteries/ipods.html