After nearly six months of waiting, the iPod 2.0 firmware now supports 802.1x authentication, meaning, I can beef the security back up on my wireless access point. I had to lower it last November because my Wii didn't support it, and later, neither my iPod Touch. I got a Ethernet adapter for my Wii which solved its problem (the wireless on it is pretty flaky anyway), but I still had to resort to plain old WPA-PSK because of the iPod.
Last night that all came to an end. I installed the latest 2.0 firmware which allows you to download/purchase applications, in addition to supporting more enterprise functionality such as Cisco VPN software, better email functions, and yes, 802.1x authentication. I'm pretty surprised that the iPod Touch came with those enterprise grade features, but I'm not going to complain. I was able to bring the stronger grade authentication scheme back up, connected my wife's lappy, and then connect my iPod Touch.