What model is your iPod touch? Because it's a lot better if you updated to 4.0.2, then jailbroke with Redsn0w, depending on the Model number.
However, if you want the SHSH for 4.0, then jailbreak now with jailbreakme.com.
I'm gonna jailbrake my iPod but have some questions. What's the chance of getting bricked and do I need to downgrade my 4.0 firmware? How do I do that?
Why not upgrade to 4.2.1 and use greenpois0n? iOS 4.2.1 is the latest (and final) upgrade for the iPod Touch 2G.