Try clicking the home button
for sure
restoring is the only way
Yes, you can "Undo" a Jailbreak, by going into iTunes and Restoring your iPod Touch, or iPhone.
yes, by restoring it.
Trying phoning apple if not try restoring it.
restoring the ipod to factory condition, loosing everything
Yes, but you can sync them back
going back to default settings
No. You must restore to Downgrade the Firmware!
When restoring your Ipod Touch the data on itunes doesn NOT get deleted. :D
restoring to factory condition that's the way to unlock any iPod
The only way to get through your iPod Touch password without restoring is entering the password.