1. Make sure you have the latest version of iTunes
2. Sync your device with iTunes so that it makes a back-up of all your stuff. This includes music, videos, apps, settings, photos and more. You will need this back up later.
3. Download Snowbreeze here
4. Download the iOS 3.1.3 firmware here
(make sure you have .NET Framework 3.5 You need this to run snowbreeze. Download it here)
5. Once you have downloaded snowbreeze, and the OS 3.1.3, open snowbreeze.
(oh yeah, and remember to connect your device and TURN IT OFF)
6. On snowbreeze, select "Simple Mode"
7. Then snowbreeze with ask you to browse for the .ipsw file which is the OS 3.1.3 file you just downloaded
8. Click browse and search for the .ipsw file. Once snowbreeze has verified it, it will say "Done"
9. Then snowbreeze will ask you "Do you want to activate your iPhone?" If its an iPod touch click no. If its an iPhone on a supported network like AT&T click no. If you want to hacktivate your iPhone click yes. Hacktivation is the process of activating the phone with a non official SIM.
10. Snowbreeze will create the new ipsw file (jailbroken) for your device.
11. Now its time to RESTORE. Go on iTunes, and in devices go to your device. Using the keyboard press SHIFT while using the mouse to press "Restore" Then release the shift button. This will make iTunes allow you to search for the .ipsw file. Remember this .ipsw file is jailbroken. Find the .ipsw file and open it. Now iTunes will install your jailbroken .ipsw file. Wait for iTunes to do its job. Once its finished your device is now jailbroken.
12. Click on loader and install cydia. Cydia is the "store" that you download jailbroken apps.
13. Now you can sync your iPod with iTunes and all your stuff will be back on it.