Friend of mine told me something about Lego LOTR taking up 1.3 gigs of space when you download it on your device but when you do it via itunes it's only like 800MB is there any truth to this?
Nope. They will be the same size. There is the DOWNLOAD size, which is the size of the file that you download (true on both your itunes or when you download on your device). Then there is the INSTALLED file size which is the size of the app shown under the settings>usage when the app is on your idevice. The file size specified in the appstore listing is the DOWNLOAD size. Once you have downloaded on your itunes, you are downloading the file with the DOWNLOAD size. But when you install it on your device, it will be the UNCOMPRESSED and EXTRACTED file size which is the INSTALLED file size. The INSTALLED file size will always be the same for each app once the app is already on your idevice.
The difference is that if you install an app over the air then it needs extra space to carry out the installation - just while it's installing. I you install through iTunes you just need the space the game takes up after it's installed.