Jailbreaking will format your iTouch, so be sure to back up any important data. When you resync, your music and anything else you sync via iTunes will return, but data done via your iTouch itself will not.

If you did not buy the iTouch 3.0 firmware you can download it here illegally:
Code:
http://rapidshare.com/files/243878648/iPod2G_3.0_Final_Restore.part1.rar
http://rapidshare.com/files/243880235/iPod2G_3.0_Final_Restore.part2.rar
http://rapidshare.com/files/243881290/iPod2G_3.0_Final_Restore.part3.rar
Note: I did not upload this file I am merely linking to it for information purposes like google did.


Installation:
If you already have 3.0 firmware skip steps 1-4.

1.) Extract the 3.0 Firmware to your desktop.
2.) Connect your iTouch to your computer and open iTunes.
3.) Inside iTunes hold down the shift key and click restore.
4.) Select your 3.0 Firmware, it will now restore it to 3.0 Firmware even if you never purchased it.
5.) With your 3.0 Firmware still on your desktop open up redsn0w and select the firmware.
6.) Perform the onscreen instructions.

If you need any further help with Jailbreaking itself watch the video:
YouTube - iPod Touch 2nd Generation 3.0 Firmware Jailbreak

You can also get help by posting, but note I will NOT help you with downloading 3.0 Firmware or getting cracked apps via posts OR messages.


Cracked Apps:
This is for informational purposes. I am not responsible with what you do with the information. Cracked apps are illegal since it is a way of getting paid apps for free.

  • Open Cydia
  • Go to Manage
  • Open Sources
  • Click Edit
  • Click Add
  • The source is http://cydia.hackulo.us/
  • Click add source
  • Go to search
  • Search for AppSync
  • Touch AppSync for OS 3.0
  • In the top right click install
  • After installation power off your iTouch and then power back on
  • Once powered up again go into Cydia
  • Go to search
  • Search for Installous
  • Touch Installous
  • In the top right click install
  • Back on Home open Installous
  • In the top right you can search for apps or in the middle you can list them alphabetically