today, i upgraded to iPod 2.2 firmware, and it deleted cydia from my previous 2.1 jailbreak. I went back into QuickPWN, which i had saved on my computer, and tried to jailbreak it. It finished loading the firmware, but the little green check never came up, so I couldnt continue. I also noticed the small print on the bottom saying something like 2.0-2.1 firmwares only.
I downloaded QuickPWN again from the internet, everything looked the same, but this time the green check came up, and everything went successfully.
My iPod Touch is a 1st Generation with 2.2 firmware, so give quickpwn a try.
the only damage it could do is delete all your music... and of course, successful or not, if you send in a broken iPod touch with any jailbreaking files on it, they will not fix it. it voids your warranty.