Too many apps; not enough space on my iPod
iCloud can be used to back up your device, but it's not a repository for Apps not in use. However, once you've purchased an app you can redownload it from the iTunes store, free of charge, as long as the app is still available.

You will lose the configuration files and any data files that wasn't saved out to an external source. (This would be the same for any app removed from the device.

To download a purchased app:


Open the App Store app on your device.
Tap the Updates tab in the lower right hand corner 
Tap the Purchased pane at the top of the apps list.
Tap the Not On This iPod tab near the top of the screen.
Tap the download from the cloud icon for the app you want to
    install.