Just to clarify, it's an iPod Touch, not an iTouch. You'll get much hazing for calling it that.
Your questions:
1) Apple seems to be on a yearly cycle with the Touch, updating in the September/October time frame after they've finished all the back to school sales and promotions.
2) Jailbreaking means you can run applications that are not at the iTunes store, usually ones that do things that Apple doesn't want you to do or ones that programmers couldn't get approved for one reason or another.
3) Sure. Why not? Or just get a refurb from Apple. High quality, lower price, warranty.
4) Just about everything that applies to the iPhone applies to the Touch. Most apps work fine on both. David Pogue's missing manual would be a good place to go for a book or just Google away.
Steve