WWDC 2010: Second, third generation iPod touch gets free update to iOS4
Apple's quirky accounting for iPhone sales -- which the company cited as a reason it was able to offer free updates for those devices, but not for the all-the-profit-at-once iPod touch units -- has been left behind, so now the equal playing field includes all the iDevices. Enjoy your upgrade!
Did I say "all?" Sorry -- only the 2nd & 3rd generation iPod touch need apply. The new OS won't run on the first-gen devices.
Updated to include 2nd and 3rd generation devices.