Your iPod has to be plugged in, first. Once it is, go to iPod and then to the Photos tab (second from the right). Check the box, click the drop down folder option bar, and browse for your folder. Sync, and you're done.
you delete photos from the folder you sync from. That's the only way to delete photos from the touch. iTunes doesn't manage photos aside from syncing so you can't view them from within iTunes.