For the answer (first Question)to the Upgrade is YES & NO ! Some jailbreaks will do it for you automatically and you can alway upgrade at anytime ,but it will either lock you from rejailbreaking it or brick it if you don't unjailbreak it , but either way you can follow my previous post to fix that ! Clicky HERE

Note: A few have reported to upgrade to 3.1.1 without rejailbreaking but I just would risk the hassel !

Answer to second question : Im really not sure , But I think 3rd is still tethered only but a few claim to not have to ? Not really sure about that or not but I would do it and check personally

I dont think I would ever spring for a 3rd gen iPod Touch now that iPhone Price is about the same and even if you use it just as a ipod and never put a sim card in it it has better features and works better and has a speaker that produces more sound ( Sound period if you have a first gen, meaning first gen only could use headphones )

If Verizon gets the iPhone like rumors keep saying then there will be alot more room for developement because they wont have sim cards on thse and you can flash them to Sprint & Cricket ! (can be done with any verizon phone BTW)

Cricket will do this for a charge if you sign up with them BTW