iTunes has this option of deleting podcasts you've listened to ("keep unplayed episodes") - this applies to both audio and video podcasts. However, a "played" podcast in iTunes terminology needs to be listened to the very end - basically played until the iPod itself stops playing it. Since most podcasts have credits (video) / music / clips / etc at the end, the entire episode gets fully played quite rarely. As a result, you have to delete things you've listened to by hand to free up room for upcoming episodes.