Why the fuck do they bother putting a Restore button, and an Update button?? If you press restore, it fucking updates anyways. What a waste of space.

Of course you could get Tiny Umbrella get SHSH blobs and then restore like that, but wait I tried that and it errored out. "Golf Clap"

because i don't want to restore my iPod every time i update it

Because restore is used when you have issues with your iPod and want to put it back at factory default.

I don't see the problem here honestly

They both have two separate functions as listed above. iPods occasionally fuck up so you can restore it to factory settings. If u wanna update your shit for that crazy cool new menu or something dumb like that then update it.