Hello,
The iPod touch has parental controls built in. You go to Settings --> General --> Restrictions. Tap to turn on the restrictions. At that point, enter a 4 digit passcode (it will ask you to confirm). Once there, you can choose to disable some of the applications such as Safari, YouTube, explicit content from iTunes, etc.
If you would like increased parental controls for internet usage on your child's iPod touch, Mobicip.com has developed a content filtering solution. This is an alternative to simply disabling Safari. Your child will still be able to utilize the internet capabilities of the iPod touch, but be protected from inappropriate content. You can learn more about it at
Mobicip | The Anytime Anywhere Content Filter.
I am a founder of this company, so I stand to gain financially from this recommendation. However, I think it is important that our children are protected from the dangers of the internet. The solution is in private beta and is completely free, though we are working on developing a more robust premium version to include monitoring reports, triggering tools, and increased customization of our filter (either categorically or through editing of whitelists/blacklists). Come check out our site if you'd like.
Hope this answers your question!
Gene