In addition to what I said previously, I'd agree with 'Soul Troll' that jailbreaking is a very good idea (though as he said it is curently a tethered jailbreak for the iTouch 3G, essentially you need to re-jailbreak it from your PC or Mac any time you reboot the iTouch, but you should normally not need to reboot it except in exceptional circumstances).
Quite apart from being able to install unsigned/cracked .ipa files by jailbreaking, you gain access to many features Apple refuse to allow normally. As a developer, you would probably be interested in OpenSSH which allows you to navigate and manipulate all the files and folders on the device from your PC using a suitable client (such as WinSCP). In addition there are apps which just make the device work much better than the apps Apple provide, in particular SBSettings which provides access to all the frequently accessed settings you might want to change just by swiping the top of the screen and tapping icons to toggle things on & off (such as WiFi, Location Services, Bluetooth, SSH if installed), and with SBSettings add-ons can also allow you toggle additional useful features such as a browser User Agent faker, so that websites don't automatically redirect you to the mobile version of their site (it changes the string to tell the site you are running desktop Firefox instead of mobile Safari).
Since jailbreaking my iTouch 2G, I haven't regretted it for one moment.