With the new iPhone & iTouch firmware 3.0 is set to release today users are allowed to upgrade their iPhones for free but it will cost $9.95 for the iTouch.
But don’t be sad my fellow petiksters! I will tell you how you can update your iTouch firmware to 3.0 free!
How to Upgrade/Update iPod Touch 3.0 Firmware
1. Download & Install iTunes 8.2
2. Download iPod Touch Firmware 3.0 IPSW
3. Connect your iPod Touch to computer
4. Start iTunes 8.2 & Select iPod Touch from devices list
5. Hold Shift and click Restore.
6. Locate iPod Touch ipsw files downloaded in step 2
7. Do not disconnect till iTunes has completed updating iPod Touch
That should update your iTouch to 3.0. enjoy!
Disclaimer: I just found this while Googling, update with your own risk.