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I'm just curious, my iTouch is on firmware 3.1.2, what are the risk of updating my iTouch, losing my installed apps I got from Installous, sources from Cydia - Themes. I haven't updated it in a long time and I want to know what is the latest update and can I jailbreak it?

If your cracked apps have been synced to itune, you'll keep them on an update but only if you get "appsync" from cydia on that update =D , you will lose most of your installed items espically if you fully restore before re-jailbreaking (its more safe)

4.2.1 jailbreak (latest firmware) - You must login or register to view this content.

and before you update just note down your favorite themes app etc.

If u can ssh... I suggest dragging ur favorite themes out of
/var/stash/themes....
Before u try anything with updating, sync ur itouch to iTunes... Then restore it... Then it should b restored to 4.2.1.
Nd u can jailbreak any idevice on 4.2.1(most current firmware). Nd GreenPoison is out for both pc nd Mac users now.. After ur rejailbroken ur goin 2 want to reinstall app sync for ur firmware.... As for sources just right them down.... The only sources I use r
repo.insanelyi.com/*
cydia.hackulo.us/