We have a memory-intensive 3D app which is primarily targeted at iPad 2 and iPhone 4S, but it works on iPod Touch 4G and iPhone 3GS as well. We have found that the smaller memory footprint on the iPod Touch 4G, combined with the retina display, makes this platform more susceptible to out-of-memory errors. iOS5 also seems to have lowered the available memory somewhat.
It's relatively easy for us to lower the resolution of 3D models, based on the platform we're using, but we have to set that resolution before loading, and thus we cannot effectively lower it dynamically based on memory pressure warnings from the O/S.
We've tuned the memory usage based on trial and error, but we've found that devices that haven't been rebooted in a long time (e.g., months) have a lot less useable memory than devices which have been rebooted recently. (Even if you kill off all the running apps.)
I'm wondering what other iOS app developers use as their practical memory limit for iPod Touch 4G apps?