Hey Bruiser! Congrats for diving more into the bath of apple wine...
We have two iPod touches in our family, fantastic little devices. Multi touch is amazing.
However, please be careful with the music apps! There are not that many which are not toys (unless you actually want toys

). Apart from those that let you play and mix loops, or do generative music, I think I bought most of them. Although I wish I didn't because I ended up leaving just 5 or so on my iPod.
Thus I would highly recommend you:
- BeatMaker which is like a little MPC/SP sampler with 16 pads, sample editing, 2 effect busses, pattern sequencer with automation of level/pitch/pan. Very, very cool app and you can really do fun stuff with it and the quality is great.
- technoBox is a TB-303 plus either TR-808 or TR-909, very addictive little groovebox.
- Jasuto is a modular synth, very cool if you want to make your own sounds while on the go.
Oh yes, check out Bloom, Melodica, Bebot, they are toys but very cool, especially for the kids and for showing friends what the iPod can do.
You may also look at these ones which I did not buy but they look very, very promising:
- Xewton studio seems like a little pocket music workstation
I would recommend you avoid these ones:
- Noise.io is ridiculously hard to use and the results are not worth it at all... Too much buzz about this app but it makes no sense to me, the interface is awkward.
- Hexatone, read above, this is made by the Noise.io team. Easier to use but the results are far from pleasing... You can spend half an hour with it but get nothing good.
- SunVox - makes even less sense than Noise.io. Very, very hard to use.