First get your iPod in recovery mode.
How to get your iPod in recovery mode:
1.Hold down the power and home button until iPod shuts off, don't even slide the bar to turn off.Just keep holding both buttons until it shuts off.
2.DO NOT LET GO OF THE BUTTONS YET! Wait until your ipod comes back on and let go of the power button when the apple logo comes on.Keep on holding the home button.
3.If done successfully, your ipod should say connect to itunes and itunes will tell you to restore your ipod.
4.Do Shift+Restore and select your firmware.
MAKE SURE YOU SELECT THE CORRECT FIRMWARE!
DOWNLOAD THE 3.1.2 FIRMWARE FOR IPOD 2G, NOT 3G!
If everything is done correctly, you will succesfully downgrade your ipod touch 3g.