If it came with 3.1.1 pre-installed, it might not be downgradable. Even though Apple says the 8GB iPod touch at $199 is the same as the old one from $229, I don't think thats the case, as the repair prices are cheaper for the new 8GB model. When downloading the restore ipsw, does it get the iPod 2,1 or is it iPod 3,1? If its iPod 3,1 then you def can't downgrade.