A friend wants me to jailbreak her 3G to run an app called iBlock. The first part of the tutorial states "Hold shift when clicking restore in iTunes". will this erase all data or leave everything intact?
It will erase everything. Make a backup of everything before you attempt this.
Not if you sync with iTunes before. iTunes makes a backup in case you need to restore your iPhone.
will the sync recognize the new jailbroken ipod, can i just backup the address book?
Just get QuickPwn and follow the instructions. It will not erase any data on your iPhone. All contacts, media etc.. will be there.
i know that quickpwn won't erase it, but i fear that the first step, the shift+restore in itunes, will do the damage