Download a 2.2 Firmware bundle from the internet somewhere and Option>Restore and select that file to Restore with. Make sure you have a backup of your current iPhone settings.
Then follow my instructions on how to restore using that firmware bundle. If they were not clear enough or you need screenshots then I will take some and post them upon request of any user.
Might I lose data by doing a restore? I am so new at this. I almost updated the day before 2.2.1 was released. But I waited until I had more time in case I ran into any problems. I have never updated an iPod before.
I didn't see a restore file at the suggested link for the iPod Touch v2.2.
Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU iPhone OS 2_2 like Mac OS X; en-us) AppleWebKit/525.18.1 (KHTML, like Gecko) Version/3.1.1 Mobile/5G77 Safari/525.20)