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Don't think it was ever officially stated why exactly, but I'm pretty sure it was because the processor wasn't able to handle all of the drop shadows on the names of the apps on the home screen, probably among other things. Same reasons it didn't get multi-tasking, I'd assume.
 
Also, when the 3rd generation of the iPod Touch launched it had three different models.

8GB - 32GB - 64GB

The 32GB and 64GB versions were '3rd generation' with updated internals and the 8GB was a repackaged '2nd generation'. I remember a few people were confused when iOS 4 launched that "my 3rd gen touch can't get x feature" because they had the 8GB.
 
If you jailbreak your iPod, you can enable it through a plist file tweak. I did this and also enabled multitasking - and Ill have to admit that the experience was terrible, it caused everything to lag to a halt.
 
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