Why bother updating my iPod touch? I tried syncing my iPod Touch, but the recently purchased/acquired apps were not sent to iTunes. Then I tried to update the iPod and got a message that before updating, I should move the apps to the iTunes library (the implication was that they would be erased if not in the iTunes library). That seems like a lot of work just to update my iPod, especially since I don't know of any actual benefits resulting from the update. What benefits will I get from updating my iPod Touch?
Depends on which version of iOS you're on. You gain all features and bug fixes implemented since then and possibly support running more software, or get more features with the software you have. The same as with any computer, really. This Wikipedia article might give you an idea.

If you're happy as-is, you might not want to bother. But don't come crying when a long-fixed bug, or maybe a hardware problem (no backups?), eats your music and apps.