I did it by following the easy instructions here. I had some trouble at first but eventually I got it.

It’s nice to be able to access the App Store without paying $10 to get version 2.0.

And wow…I can use my iPod touch to do a lot of crap now. I can control my laptop with my iPod touch. Pretty neat.

Here’s a photo of the pineapple screen which means that you’ve successfully updated the firmware to 2.0 by hacking and jailbreaking it. See the App Store in the second photo? :)