Deleting and re-syncing music library does not work.
So after deleting and re-syncing my music library AGAIN, the problem of missing art (in coverflow mode) is STILL there!
I DID manage to find a solution though

BUT it is very TEDIOUS, TIME CONSUMING, and doesnt resolve it 100%.

Here is what I did:
1) Find an album in my iPod Touch missing art in coverflow as stated in my original post
2) Download the missing art from the internet, unless I already have it
3) Open iTunes and find the album in my music library
4) Highlight every track in the album
5) Right click>get info
6) Double click the box named "Artwork" on bottom right
7) Finder will open. Locate the art I downloaded and select "open". Click ok.
8) Sync iPod.
The album art now appears in coverflow mode again and stays there.
**Here is the problem: For songs missing artwork that are individual and not part of an album, when I click "get info", the "artwork" box doesnt show up, and I cant use the method described above
I included photos to explain what I mean regarding the "artwork" box showing up for albums and not for individual songs.
**UPDATE**
I was able to fix my individual tracks also. Except for 2, using this method:
1) Download the art for the track with art that doesnt show up in coverflow
2) Locate the track with missing art in iTunes library
3) Right Click>get info
4) Click the "artwork" tab
5) Delete the art thats there
6) Add the art I just downloaded
7) Sync
After that they were all there in my coverflow except for 2 songs that are individual. I can't seem to fix them no matter what. All my art has been restored and viewable in coverflow now except for 2 songs. I can live with that for now.
I have 495 albums and a total of 2,835 songs so it wasnt too bad for me since my library isnt that massive. Only about 19GB