Yep. It does to mine.
This is what I did--FWIW:
-First, made sure that the iPod Touch was running 1.1.1 and
-Jailbreak it by pointing MobileSafari to
http://jailbreakme.comYou have a jailbroken 1.1.1 iPod--halfway there.
The next step might take a couple of tries and quite a while--the key is don't give up. Making sure you're near a good wifi signal helps immensely.
-Go into Installer.app and select sources.
-Add this as a source (no quotes): "iJailbreak.com/repo.plist"
-Once it finishes updating, exit installer.app and re-enter it.
-Go to Install and scroll down--you should see a folder that says iJailbreak Mobile.
-Select the updater for jailbroken 1.1.1 iPhones/iPod Touches.
-Let it do its thing (it took about 20 minutes on mine).
Once finished, go into your settings General -- > About and ensure it's 1.1.3 (build 4A93).
You may need to upgrade Installer.app--go ahead and do that.
Would also recommend installing both the BSD Subsystem and its Terminal fix--a lot of applications seem to rely on it.