The question isn't really if, but when.
It's only a matter of time unfortunately.
Hopefully not for a while, as I'm a 1st gen touch owner myself, but more and more games are coming out supporting everything but the 1st gen touch.
At this time I don't think it's worth upgrading, as the games aren't really that great to warrant a new device, but sometime in the not so distant future, we will not have a choice.... :(
I would hope that my 1st gen gets a couple more years under its belt before becoming obsolete, but inevitably, more and more apps will stop supporting it as hardware improves and opens more possibilities.
Agreed. The more complex the games/apps get the greater the need for better hardware to support the apps. I think by the release of the next generation iPod the 1st Gen will be obsolete.
As long as the OS supports iDevice, the iPod touch (any generation) will be supported. What you may find, however, is that modern games which use more powerful processing, will not work very well on the iPod touch 1G.
Of course, eventually, it will fall out of support, but not for a while.
I find the main downside to the first gen iPod is not the compatibility issues, but the battery life. There are plenty of great games that are able to be played by the first gen, and the majority that cannot usually have their aspects such as bluetooth or microphone input.
I'm glad my iPod battery still works so well after these two years, but it's slowly wearing down.
The reason I upgraded to the iPod touch 2G (skip the 3G) is that it has: almost no hiss from the headphone output, amazing frequency response with earphones (for music, games and movies), and a dedicated volume rocker. The faster 3D and processor are the least of my worries, but oh bother.
I love having bluetooth too though, makes bicycling so much more fun!