There was something about that in another thread. Lee was trying to make sure that AppGameKit could support iOS prior to 4.3, but I don't know if that worked.
What version is your iPod running?
The AppGameKit should be running fine on 3rd and 4th gen. Possibly 2nd gen as well. If you haven't picked up anything yet, try and get your hands on at least 3rd gen. Used 3rd and 4th gen ones are out there for decent prices. I got my used 4th gen for $120.