You can. But I've put about 30 albums on my phone and I have little internal space, so I just put a "small list" on it.
But for what it is worth 1 GB may be fine. Handling 30 albums would be a nightmare with the Shuffle.
It works (as the name says) if you want to listen to a playlist in shuffle. But for me (and my ex) it didn't work for anything else. So we both found out we didn't had any use for this device.