You can maximize the number of songs that fit on your iPod shuffle, and change the amount of space reserved for music and for data files.
To manage space on your iPod shuffle:
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Connect the device to your computer.
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When the device appears in the iTunes window, select it, click Settings, and then do one or more of the following:
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To maximize the number of songs that fit on the device, select “Convert higher bit rate songs to 128 Kbps AAC.â€
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To control how much space is reserved for music, drag the slider to the left or right. This won’t affect files already stored on the device.
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For more information about using your iPod shuffle, see the documentation that came with it or visit the iPod website.