HDD = a lot of space for songs you wish to buy (thus more money you might spend)
Flash = less space, less power consumption
Best = your choice... if there was best option then you would not find other options on the market...
I would go with HDD... but I would not buy iPod touch on the first...
Your question is not clear.
JPG, GIF, PNG - all of them are some image formats. All of them can be made using webcams. GIF has the limitation of having only 256 colors (or less). JPG if causing come artifacts. PNG is similar to JPG.