Hmm...I don't have a video iPod (mine is old - not even a color screen! *gasp*) so I am not sure about your questions. I'm pretty sure they all play video now. The nano and touch have flash drive, but not the regular ones - those are hard drives. I was under the impression that you needed to buy videos on iTunes. There are hacks that can convert your video into the proper format but I of course haven't used them...but I would check out:
All things iPod, iPhone, iTunes and beyond | iLounge
They should be able to answer your questions - possibly just by browsing the forums and articles. This site has helped me a lot with problems I've had so I know these guys should be able to give you a recommendation.