We've been able to jailbreak the iPod Touch 2G for a while now, but the jailbreak wouldn't stay if you rebooted the iPod. Well, MuscleNerd et. al. have fixed that problem and released a jailbreak today.
Sadly, a company by the name of NitroKey apparently got ahold of a copy somehow (details are really sketchy here) and were selling it, thus forcing MuscleNerd's hand. The Dev team had originally been planning to release it after the rumored iPhone 2,1 might be released in possibly June, with the hope that by keeping their method secret, Apple wouldn't fix it and therefore the Dev team would be saved a bunch of work.
Right now you can grab the exploit from
However, I can't help you stick it in the right spot...mostly because I only have a 1G Touch, so I haven't been paying much attention to redsn0w et. al. MuscleNerd is trying to get the Dev team to pull their act together and release a new version of the PwnageTool and QuickPwn soon.
I've written up a bit more detail about how the hack actually works at my blog on security, which I felt more fitting for the purpose. Especially because we get into such wonderfully nerdy things as hex memory addresses...