You can jail break your ipod touch 3 or 4 using the latest version of Sn0wbreeze. Similarly if you have already tried for jail break through RedSn0w and were facing errors you can use this tutorial for ipod touch jailbreak. This guide can be used for jailbreak ios 5.0.1 on iPhone 3gs, iPhone4, iPod Touch or iPad.
Note: Ensure that your ipod touch is having version 5.0.1 (although this jailbreak works with old versions also I suggest to update if you can), go to Settings —-> General —> About and check the Version it may be similar to "5.0.1(9A405)". If it is not 5.0.1 try to update by going back to Settings —-> General —> "Software Update" or using iTunes. You can download latest iOS by visiting this link.
Once your ipod touch is updated to 5.0.1 now you follow these steps to jail break ipod touch.
1. Download latest Sn0wbreeze 2.9 by visiting this page.
2. Download the zip file and unzip in a folder. Open that folder and double click sn0wbreeze-v2.9.exe to see below screen, now click OK.
3. Now you can download or select the ipsw file which you shall use for jailbreaking ipod touch. The new version has the option of selecting you IPSW file if you have already downloaded this by clicking Browse or you can download directly from Sn0wbreeze window by clicking "iOS firmware are downloadable here" as shown in below screen shot (I recommend to use this option) make sure you have a fast internet connection.
4. Now you have the option of selecting your device and the firmware, after selecting the both options click Start Download. Connect your ipod touch to computer.
7. Sn0wBreeze will automatically complete the generation of custom IPSW (will take much time 15-20 minutes) the file will be saved on your computer.
8. Now you will put your ipod touch in DFU mode by just following screen instructions.
11. Your ipod touch should be visible in your iTunes left pane. Click your device in left pane and in middle of iTunes screen you have to press Restore but while holding the Shift Key.
12. iTunes will ask the location of custom firmware file which you generated using Sn0wbreeze locate on your computer by browsing and click done. iTunes will restore your ipod touch automatically which is now jailbroken untethered.
Jailbreak for iPhone4s and iPad2 is going to be released shortly if you want to be informed join my site below I will email you whenever it is released.