My wife got a brand new 32GB iPhone 3GS a couple of months ago so I'm now using her old classic 80GB iPod as there was never enough room on my own 8GB iPod nano.
I've put tons of essential mixes and beats in space shows on there and there's been no problem. iTunes is a fucking pain in the arse but I only ever use it for transferring stuff to my iPods.
If you're worried about losing data it's probably worth getting another external hard drive on which you back everything up. They're quite cheap these days and I got a 1TB one for about £60 a few months ago.
Also if you're looking to complete your Essential Mix selection then check
this page out as it has rapidshare links to almost every EM since the very beginning and there's loads of great early ones from the likes of Billy Nasty, Dave Clarke, Laurent Garnier and Dave Angel