I hook my iphone into a JVC car stereo. I can't offer any advice other than keep trying. The connection is finicky, both on the software and the hardware side. It randomly will and will not charge while connected. The connection comes loose sometimes, at which point the music stops playing and leaves up the title of the last song. Sometimes it just gets stuck when the phone is first connected.
So, as I've had different results, maybe you will with each try (hopefully better ones). As far as software updates to improve this; it all depends on where the problem lies. If the JVC lacks what it needs to talk right with your touch and my phone, then we are screwed. However, if the problem is with the apple device, then a software update could fix it. I have no programming knowledge, but I would guess it would be as simple as writing a program for the phone/touch to mimic the responses/interface that the JVC has with the ipod. Who knows?