Just recently, the iphone-dev team announced that they jailbroke the iPod Touch 2G - but didn’t completely get it to work for everyday use.  It’s a tethered jailbreak, which means if you don’t know what it means, don’t do it.

I am however in the process of getting ahold of a iPod Touch 2G so I can write a decent easy to follow walkthrough for it.  For now, if you want to try it yourself, check http://redsn0w.com

The redsn0w readme can be found here.
The tethered jailbreak can be downloaded here.

Please comment with your findings and success/failure.  From what I remember, everytime you boot your iPod, it needs to be plugged in and use this tool.  Let us know!