Though iOS 4.0 was released a couple of weeks back, we are still waiting for that complete jailbreaking tool which can jailbreak any iDevice model without any issues. Redsn0w 0.9.5 was released by the iPhone dev team which could jailbreak iPhone 3GS 4.0 (old MC models) and iPod Touch 2G 4.0. And PwnageTool 4.01 can jailbreak iPhone 3GS (old bootrom) and is for Mac OS only.
iH8Sn0w, the guy behind Sn0wbreeze jailbreaking tool has now updated Sn0wbreeze to v 1.7 which lets you to jailbreak iPod Touch 3G only if you have SHSH blobs saved for iPod Touch 3G 3.1.2.
Download Sn0wbreeze 1.7
The procedure to jailbreak iPod Touch 3G using Sn0wbreeze 1.7 remains the same as our previous guides here.