I have no idea; I don’t have an iPod touch or an iPhone (I’m holding out for an iPod touch with a camera - if the rumors are to be believed, one will finally be coming in September). I would use a third-party application that does it for me.
I use a program called Wallet.
Like 1Password, it encrypts your data (using AES 256), and then stores it on each device. I use it to keep my personal data (passwords, logins, credit card numbers, etc.) in sync between my two computers and my iPhone.
I think I’m up to about a zillion passwords now. Everything from message boards to email to photo sharing sites to banking. I don’t even store my banking access info as a straight out password, but more as a trigger to remind me of what it is.
But, it would be nice to have all those other items in one place, as well as friends and family email/phone numbers etc.
Arnold Winkelried has my reasoning correct. There is a good chance that at some point I will drop, forget or have stolen an item like this. So I’d rather make it hard for the 14yr old that picks it up to access whatever info I’m storing there.
I use a program called Ultrasoft DataShield on the Palm T|X to store passwords, logons, etc. in a protected (128-bit encoding) format. Very handy, but now that Palm seems to be coming to an end, I’ll have to start considering alternatives 
I think there are also ways to have the device tell you where it is or disable it if it gets lost.
It has been quite a while since this topic was updated, so…
Yes, the iPod Touch has a lock screen that takes 4 digits to unlock the device (as with the iPhone). You turn the passcode on or off, or change the passcode from the built-in Settings app.
And, after much searching and testing, I have settled on KeePass as my password keeper. It is a free open-source package and is available on multiple platforms. I use version 2.24 on a Windows 7 laptop. The entire database is stored on your system (more on that later) in a secure, encrypted format. You set a (hopefully secure) password to open and decrypt the database.
To simplify web logins, I also use a Firefox add-on called KeeFox that allows Firefox to see the KeePass database and fill in login screen data.
To make the database accessible across multiple platforms, I use DropBox. Tell KeePass to store the encrypted database in a DropBox folder and away you go.
Finally, on the iPod Touch, I use an app (free) called MiniKeePass that allows me to open and view the database on the iPod or iPhone. Of course, this requires that I also use the free DropBox app.
It all seems to work very nicely and smoothly. Changes (additions to the database) are synced to all platforms through DropBox, so everything stays up-to-date. I’m only starting to further explore all the capabilities of KeePass, but it has a wealth of features.
Further on this topic…
I have been using the KeePass/Dropbox combination for over a year now, and I have to say that it seems to be working well.
KeePass includes a built-in section called “Secure Notes” that you can use for information other than passwords, like credit card numbers, passport numbers, or whatever you want to keep track of. There is a text field that you can use to record pretty well any data you like.
If you make changes on your “main” computer in the KeePass file, you have to tell it to save the changes (File > Save) - this tells Dropbox that it needs to update the file. As I said before, the file is completely encrypted on your computer; Dropbox just carries it as data, and if someone got into your Dropbox account, they still could not open the file.
Once the Dropbox file has been synced, you can go to the iPod Dropbox app and tap on the filename that you are using for KeePass data. DropBox will tell you it cannot open the file, but you then have the option (look for the “in-tray” icon) of sending the file to another app. Just choose the MiniKeePass app.
Now you can go to the MiniKeePass app, open the file, give your password, and you’re in business. MiniKeePass has a built-in browser that you can use to navigate to your passworded sites and log in automatically (use the square-box-with-arrow icon, then at the logon page, select the account/name field and tap the “head” icon, then select the Password field and tap the “star” icon) or you can use the browser of your preference and enter the data by copy-and-paste. Tapping on the name, password or URL field in MiniKeePass will copy it to your clipboard, which then allows you to paste the data into the appropriate place with your browser. Be careful - your clipboard is NOT encrypted.:eek:
The whole process is not seamless and automatic, but for the kind of information I’m storing here, I want it to be secure first and foremost. If this means jumping through an extra hoop or two, that’s OK with me.
Finally, be cautious where you use any of this information. At home, on a secured and password-protected wi-fi network, OK - but I would never look up my passwords or other sensitive data while I was on a public network like Starbucks, McDonalds or my local library. But, once you have synced with Dropbox, you can go into Airplane Mode and open your MiniKeePass file in safety - wi-fi is not required.