Yes but you will lose all the jailbreak features.
Unless you want to brick it, don't. Wait until there's an update to your "Jailbreak" and then update. BE SURE TO UNJAILBRAKE YOUR IPOD BEFORE UPDATING!!
Well the no matter what you do. Update, Restore, and etc, you have to rejailbreak it.
no it isn't because iPod touch 2g runs firmware 4.2.1 for minecraft you have to have firmware 4.3 that iPod touch 2g doesn't support anymore. if its jailbroken you can get minecraft PE on a 2g :)
yes
Not without erasing the jailbreak.
you must restore itouch then update. Sorry!
The iPod Touch should not delete things when you update it. All content should remain on the iPod (unless you have a jailbroken iPod, in which case it will remove all non-App Store apps and other jailbroken features).
yes. the current update is 3.1.3 and to update to it you have to restore you iphone, update it then re-jailbreak it. but at this moment in time this is not an jailbreak for firmware 3.1.3.
you can't
Yes and no. If you sync it your iPod will remain jailbroken. If you update it to say 4.1 it will un-jailbreak your iPod. Then you will need to re-jailbreak it.
Firmware 3.1.1
you cant anymore