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Apple is once-again charging iPod Touch users with a fee of $9.99 for firmware 3.0 upgrade but we have yet again come up with a hack to help all iPod Touch users do it for free and what makes our hack different is, that it has been tested on a real iPod Touch and actually works for both iPod Touch 1G and 2G.
Update : Update iPod Touch Firmware 3.1 For FREE
Tidbit : iPhone Firmware 3.1 Is Now Available For Download

Just follow the steps below and soon you will be having an updated iPod Touch with firmware 3.0 absolutely for free.
- Grab latest iTunes 9 from here
- Connect your iPod Touch 1G or 2G to PC/Mac with iTunes.
- Click on Restore while holding Shift (for PC) and Option (for Mac).
- Browse to the Firmware 3.0 for your device and select it.
- Sit back and enjoy while iTunes does the rest! There you go, did it without even paying a penny!
Download links For Firmware 3.0
iPod Touch 1G
http://tinyurl.com/npevxd http://tinyurl.com/mr2eeb http://tinyurl.com/nvgknp
iPod Touch 2G
http://tinyurl.com/naglaq http://tinyurl.com/lpk2zk http://tinyurl.com/rckk4n
Use HJSplit (for PC) and Split&Concact (for Mac) to join the parts into one file. Once you download the firmware locally on your PC or Mac, follow the steps above to update iPod Touch to Firmware 3.0.
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how about for itouch 8g? is this applicable?