Forum member AriX posted the first automated Jailbreak solution for the iPod touch. This allows a simple interface to Jailbreak your iPod Touch. The solution presently only works on Intel/Mac OS X Tiger and there have been reports of success by forum members.
Once Jailbroken, this allows the iPod Touch to run many of the 3rd party iPhone applications.
The process for Jailbreaking the 1.1.1 iPhone is different and there is not one-step solution available yet.
Update: Windows users should try touchFree.