My 2 kids each have their own itouch. Can I use the same apple id for each device? If not, what is the recommended setup. They dont have their own e-mail id's, I have them both using my account.

I would highly recommend getting everyone their own Apple IDs as this will cause problems as they get older and want to move to their own account.

You can create a free emaill account from Yahoo, Google or Microsoft.

I recommend that you

Create a NEW account/ID for each of them using these instructions. Make sure you follow the instructions. Many do not and if you do not you will not get the None option. You must use an email address that you have not used with Apple before. Also, make sure that the birthdate you specify ends up with an age of at least 13 since you have to be 13 years old to create an account.

Creating Apple ID without credit card: Apple Support Communities

Use the new ID on her iPod but only for:

Settings>Messages>Send and Receive

Settings>FaceTime

and Settings>iCloud if you want her to have separate Contacts Calendar and some other things.

Continue to use the same/common Apple ID for Settings>iTunes and App stores so you can share purchases.

Well, if mutiple devices having the same account is not possible, create a new email on google, or yahoo, whatever, and i recommend making multiple apple accounts all leading to the same address. That way, your apple accounts are passwords only you know.