According to iFixit a well known Apple repair house. Although the 3G iPod Touch is officially marked only supporting 802.11 g it have an under powered 802.11n wi-fi chip. The wifi module made by Broadcom can technically use 300 Mbps maximum wireless transfer and includes an FM transceiver that could make the iPod Touch stream music to any radio device. (see photo after the fold)
According to reports Apple limits the wireless speed to prevent it from overheating, also lessen it’s battery life. It’s also possible that Apple is preventing the Touch from cannibalizing the iPhone market. I think to protect the iPhone market they should make the iTouch screen bigger for better gaming.
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