As we already know that Jailbreak iPod Touch 4.0 on iPod Touch 2G was demonstrated earlier by ih8sn0w and deminz95 find out decrypted keys for iPod Touch 3G. These achievements have lead the foundation of sn0wbreeze 1.6. Now, pre release GM candidate of iOS 4.0 (iPhone OS 4.0) was released to developers and they again came out with solutions like Jailbreak iOS 4.0 3G and Jailbreak iOS 4.0 3GS within no time.
Update: redsn0w 0.9.5 now supports iOS 4 jailbreak iPod Touch 2G.
This time, ih8sn0w has managed to jailbreak iOS 4.0 GM on iPod Touch 2G (2nd Generation). He has supplied with a screenshot which shows Cydia is there on iPod Touch 2G running iOS 4.0.

He has also demonstrated that native multitasking can be enabled on iPod Touch 2G as well. So users who were disappointed that iOS 4.0 on their iPod Touch 2nd Gen will not enable multitasking, should no longer be worried.