Update: Don’t follow this guide. Use this one to jailbreak all iPod Touch models with OS 3.1.2/3.1.3 untethered using Spirit Jailbreak!

Important: iPhone OS 3.1.3 has been released for the iPhone and iPod Touch. We’ve got a new guide up on how to jailbreak iPhone 3.1.3 and iPod Touch 3.1.3 with redsn0w 0.9.4. Don’t upgrade to iPhone OS 3.1.3 if you’re using an unlocked iPhone 3G/3Gs or a jailbroken iPod Touch 2G (MC Model)/3G. The redsn0w guide is for iPhone 2G/3G jailbreak and iPod Touch 1G/2G ( non MC Models) only.

George Hotz recently released blackra1n RC 2 for iPhone and iPod Touch which fixed various bugs and issues with the jailbreak tool. A good number of previously disappointed users now have succeeded in jailbreaking their devices. For those who still haven’t jailbroken their iPod Touch, here’s a quick guide on how to do that with blackra1n RC 2.

• Download iTunes 8 from Apple’s website.
• Upgrade to OS 3.1.2 via iTunes. It will be free if you were already using 3.0 on iPod Touch otherwise you’ll have to buy it.
• Once your iPod Touch has upgraded to 3.1.2, download blackra1n. Use Windows XP compatibility mode if you’re using Windows Vista or Windows 7 ( if it crashes ).
• Launch the tool, and click the ‘make it ra1n’ button.
• It’ll take sometime while your iPod Touch is jailbroken. You’ll see George’s picture, which means it’s working. After it’s down, it’ll restart.
• You should see the blackra1n icon in your apps now. Launch it.

• From here, you can install Cydia, which lets you install jailbreak applications. There is an option to install Rock or Icy as well, which are Cydia alternatives.

• Congratulations, you have your iPod Touch 3.1.2 jailbreak up and running.

Note:

• Only tethered jailbreak is available for iPod Touch 8GB 3G as well as iPhone 3G S, this means that to restart your device after a shut down, you’ll have to connect it to your Mac or PC and run the jailbreak tool again.
• This will not unlock your iPhone.
• A similar process applies to the Mac version. You will not have to change any compatibility settings though.

Troubleshooting ( from a previous post ):

• Make sure you’ve updated to 3.1.2. This jailbreak is not for 3.0 or 3.1.
• Download the purplera1n tool to your desktop. Some users have reported issues of the application crashing or having issues with rights on Vista or 7. This should fix those issues. For more convenience. run it as an administrator.
• Make sure no other software is running when you jailbreak to avoid interference.
• If your device doesn’t boot for a long time, hold down the power and home buttons and restart it. If it tells you to connect to iTunes, something must have gone wrong and you might have to restart the process. I know this is annoying, but it has worked for some people after some tries. It does work.
• You won’t lose your data by jailbreaking. Only a fresh firmware restore could mean that your apps might go away, but they can be synced back using iTunes.
• If you have a white screen turn off the device by holding the power and home buttons for 10 seconds and boot it again.
• If iTunes keeps popping up, use CTRL + ALT + DELETE to go to the task manager and kill all iTunes processes which includes iTunesHelper.exe. This can cause interference with the process too.
• Strangely, doing the process on different computers has also worked for some people.

Hope this guide is easy enough for you.