What is the best jailbreak software iPod Touch?

Depends on if you want it tethered or untethered. (Tethered means that when you shut down, it will boot up to the original Apple software. Untethered is permanent unless you reset the iPod)

I recommend Greenpois0n (with a zero for the second O) for untethered and Redsn0w for tethered. Both are trusted jailbreaks that are nearly always successful.