Apple's iPod Touch comes with a screen lock feature that allows you to set a four-digit security code to prevent others from using your iPod. Every time the iPod locks, you must enter this code to unlock the screen and access the user interface. Entering the wrong code too many times, or simply forgetting your security code, can cause you to be completely locked out. When this happens, you can quickly unlock your iPod Touch.
Connect your iPod Touch to the computer you usually sync it with. When you disconnect your iPod, it should now be unlocked. If Step 1 does not work, you have to restore your iPod Touch. Be advised that restoring your iPod Touch returns it to the original factory settings. This means that all your songs and files will be deleted and lost. You can resync your files to your iPod from iTunes once you have finished restoration. Connect your iPod to your computer and open iTunes. Make sure you have the latest version of iTunes before proceeding. In the left navigation panel in iTunes, select your iPod under the "Devices" section. Click the "Summary" tab and select "Restore." When iTunes prompts you about backing up your data, click "Back Up." In the following window, click "Restore." After the restore process completes, you will see the Apple logo on the screen of your iPod. Leave your iPod connected to your computer until it shows up again on the iTunes navigation panel. Your iPod touch is now unlocked. In iTunes you will be able to setup your iPod. Select the backup you made in the drop-down menu to restore your data files. Click "Continue" to finish the restoration. iTunes: Restoring iOS software http://support.apple.com/kb/HT1414