To begin, you will need to restore your iPod touch to install 2.0 on it. Be warned, restoring the iPod will erase all content on the iPod, so make sure you have the content in your iTunes library.
To do this, open iTunes, connect your iPod touch, and when you see the Summary pane, hold down Shift and click "Restore" (Hold down "Option" if you're on a Mac). It should come up with an Explorer window. In this window, navigate to the 2.0 installer package (.ipsw), select it and click OK. iTunes should now restore the iPod touch and install the 2.0 software update on it. After it has finished restoring to 2.0, you will want to click the "Update" button in the Summary pane to update the 2.0 software to 2.2.1, the most recent version of the 2.0 firmware.
If after installing 2.2.1 you'd like to jailbreak it again. Click on the link below to download QuickPwn, which will jailbreak your iPod touch and install Installer and Cydia on it.
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