General info:
How to put an ipod touch into restore mode: Plug it into your computer, and turn on iTunes, then: hold the power and home buttons down until it resets. Release the power button, but keep the home button held until it enters recovery mode.
How to restore to a specific version of the firmware [...]
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Best applications for a Jailbroken iPod Touch / iPhone
If your iPhone or iPod Touch is jailbroken, you can use the Installer.app to load and install many different applications. Below is the list of the applications that I found to be useful, fun or interesting:
Organizing multiple pages of applications:Categories
Downloading/Watching YouTube movies: MxTube
Photos alternative: PhotoBoard
e-Book reader: Books
Information Lookup: weDict , iMoon , iTrac
Networking: Stumbler, [...]