yeah, that's cool and all...until someone hacks your systems b/c your wireless gives out ip addr on the same subnet as your computers; ...or RIAA/MPAA sends you a letter claiming your ip block has been stealing their intellectual property, ...or men-in-black breaks down your doors b/c someone's hacked DOD/NSA property via your ip (block).
+1
This is very nice of you but dangerous for yourself. As acurafan said, anyone can connect and download anything on your connection and you are soley responsible regardless of who is using it. If you get a letter from your ISP you are responsible, not the person who was using it.
To the OP: Have you actually tried restoring your iPod and trying to reconnect?
Or has the iPod ever connected to this network before and suddenly stopped for what ever reason?
It sounds odd that it doesn't work and seems like something quite trivial could be stopping it. Like someone else suggested, try and use a different IP address incase your DHCP lease is conflicting with another user on the network