A few things to note. First off, hard drives are measured and sold using 2 different systems. To quote wikipedia,
The megabyte is a multiple of the unit byte for digital information storage or transmission with two different values depending on context: 1048576 bytes (220) generally for computer memory;[1][2] and one million bytes (106, see prefix mega-) generally for computer storage.[1][3]
Basically this means that when you buy something that is advertised as 8 Gb storage, the OS (Windows, OS X, iOS, etc) will only see 7.something Gb. Not a big deal, but a misleading way most electronics get sold. Typically on the box in small print it will say something to the effect that your system will show it as having less space than advertised.
Second, it ships as 8Gb, but the iOS will end up using a reasonable chunk of that. So probably 6 and change free for storage.
Third, a "Low Memory" warning isn't the same as low disk space. Low Memory can be caused by an app not behaving as it should, and not giving system resources back to the device when its done. You may need to force close it as a PP already mentioned, or go through a quick reboot on the iPod. They are just like computers, and do occasionally crash.
That should be more than enough for day to day use. I have about 9-10 screens worth of apps, a few movies, and a few hundred songs, and that totals about 8Gb of use. Something you need to remember when you think a game is simple, that doesn't mean that it won't take up space. If an app uses lots of different graphics, those take up lots of space. Same applies if the app has lots of music or videos built in.
If you do find that you run out of the free space, then you will simply need to encourage your son to rotate off the stuff he isn't currently using/doesn't like. The same as how you move pictures off a digital camera once you take them to make space for more, you should do the same on the iPod. Does he really need Christmas music in July? Etc. You will still have it on your computer, and can copy it back over later if he needs it. Carrying more than 8 hours of music at a time is really needed for most people as they won't get to it all anyways.
To your original question, you will get hit with a restocking fee since it has been opened, and may need to return the 50 credit. They may not make you do it if you buy the new one. Personally, an 8Gb is more than enough for a 10 yo. It will help him to learn to manage his resources instead of trying to do everything at once.
