1. You can import songs you already have to itunes.
2. I think the 3rd gen one is limited to iOS5, but almost all games and apps will work.
3. Yes as long as you have a wireless router.
I owned a 3rd gen iPod touch for years and I have to say it was very good, you might start to struggle with the 8gb storage space depending on how much music/videos/apps you put on it.
Storage space isn't a problem, i only have 350mbs of music.