iTunes and iPod help needed

Ok, recently my iTunes library got to the point where my Music collection is bigger than my iPod can hold. Ever since then I have struggled with how to sort what music is placed on my iPod. I initially had it update itself and create a playlist to update from each time. This created the problem that when new music was added I had to redo everything and also that I lost my playlists on my iPod.

So I seem to have a bit of a poser here. Basically, what I would like, is to have my iPod update with new music moving onto it as it is added replacing less listened to music or less highly rated music. Maybe, the odd bit of non-music as well such as my Dave Gorman episodes. I thought that maybe there were some people out there who had experienced similar and come up with a good solution. Obviously I am trying my own techniques, but not having much luck, so hoped someone out there could shed some light on this issue!