Bear in mind that Apple quotes the number of songs you are able to store on any iPod by using the AAC format at a bitrate setting of 128kbps and for a 4 minute song.
Look in iTunes under edit/preferences/advanced/importing. What does it say in settings and import using? You may have the import settings and bitrate set wrong. You need to compress your music using either mp3 or aac. If you see AIFF, WAV or Apple Lossless then those formats are going to take way more space than mp3 or aac, especially the first 2 which are raw uncompressed formats.
See this article.
<a href="<a href="http://docs.info.apple.com/article.html?artnum=60955">How much stuff will fit on my iPod?
Apple Lossless will give excellent sound quality, but at a file size that is much larger than mp3 or aac, so the trade off here is not as many songs will fit on your iPod.
You should probably start by encoding a piece of music you are familiar with, in either mp3 or aac at something like 192kbps, listen to it, then try again at different bit rates, both lower and higher, to see if you can hear a difference in sound quality.
If you can’t hear the difference in sound quality between various bitrates, then the lower one will suffice, and you can store more songs on your iPod. Try this in both encoding formats. You could encode the same song several times in iTunes under a slightly different name (just edit the song in iTunes and add the bitrate after the song title), transfer these songs to your iPod and do some comparative listening. Then you can make an informed decision about which format/bitrate is best for you.
See this for how to convert your songs to a different format.
http://docs.info.apple.com/article.html?artnum=93123