You have a reason to be scared to jailbreak your iPod Touch. It's not all that good of an idea, because it should not be done.
If you do not do it right, it could ruin your iPod Touch, and jailbreaking also voids your warranty, so if you ruin it, you don't have the warranty to replace it.
Risks: If not done properly, it could ruin your iPod Touch. It can also void your warranty. Jailbreaking allows you to download all apps for free, which is actually considered illegal because the apps that you need to pay for need to be paid for.
Benefits: You can customize your iPod Touch by actually having picture displays behind the apps, have cool noises when you unlock the iPod Touch, and you can download all apps for free (which is illegal).
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