Note that I haven't used this particular app before, so I don't know for sure whether it's compatible with the iPod Touch or not. That being said, are you connected to a public WiFi hotspot which is operated by one of the major communications corporations (and whose coordinates are therefore likely to have been registered with a location data provider)? Or are you connected to your own private home network?
If it's the latter case, then the iPod Touch's Core Location service often won't be able to tell you very much unless Apple's contractor (Skyhook) happens to drive down your street, identifies your WiFi router's MAC address without your knowledge, and stores its coordinates in their database. Alternatively, you yourself can submit your WiFi router's coordinates to their database voluntarily.
Is the Google Maps application able to determine your location?