JohnsonTran,
1024 MB is one Gigabyte to a computer. However, drive and memory makers often label 1000 MB storage as one Gigabyte. However, this is is the space before the drive is formatted. There is at least 1000 MB of flash based memory within your iPod Shuffle (Second Generation) used to store music.
The formating takes some of the space. This is similiar to giving the square footage of a house based on exterior dimension, and then comparing that to the square feet of the rooms within the house taken from interior dimensions. Formatting, or laying out the flash disk in the iPod so it can be used takes up some space. Typically formating uses around 3-10% of a drive.
Then additional space if taken by some files that are needed by the iPod for playback, basically the iPod's operating system.
So you will end up with something similiar to:
1024 MB before formatting, about 950-970 MB after formating, and about 20MB less for "other" files used by the iPod.
iPod Shuffle (Second Generation) is listed as holding approximately 240 songs (see
http://www.apple.com/ipodshuffle/), and there is a note about that. It lists 240 songs, at 128kbps AAC, of about 4 minutes in length, which is going to be approximately 960 MB (approximately 1 MB per minute of song).
Does this explain match what you are seeing?