Hey,
Hows it coming along? pwnage 2.0 is pretty slick, although you may run into one hiccup. I did the iphone and I had to get it into DFU mode...I am uncertain if you need to get the touch into DFU mode however, there is no software solution to do this. It's a hardware timing trick. -This is only necessary for the 2.0 updated devices-
Here's the process.
This is how to achieve DFU mode. You can do it on every phone:
* Attach the phone to the pc
* Turn the phone off
* Hold power and home together for *exactly* 10 seconds
* Release power but keep holding home until the pc beeps as a USB device is recognized.
* At no point will the display come on. Now your restore should work.
Also...I won't link the step-by-step guide that is well written because it contains hyperlinks to the baseband files (not sure if that's allowed

) but a google search will show it. It should be noted however that the firmwares it links are not hacked...pwnage creates your own custom fw from the real ones that apple supplies you