iOS 5.1 or 5.1.1? The reason I ask is because 5.1 is quite smooth while 5.1.1 crashes Safari alot- thus having to refresh all background apps. Besides that 5.1.1 is mostly fine.
If on 5.1 I would stay on that OS forever on touch 4g as that performs the best compared to later versions. Also you can restore your iPod touch and set up as new if you want-make sure to backup everything.
Don't go on iTunes and click restore as that will leave you with iOS 6.1.2 firmware. Instead go to Settings-General-Reset-Erase All Content and Settings
This will keep it to whatever version you are on. A video here:
YouTube:
video