I just remembered the Fonera! I think that would be a great solution for this project. I don't even think you'll need the Arduino. Google Arduino + Fonera and there are some interesting concepts
Basicly, the Fonera is a Wifi router with Linux as its backend. Due to its cheap price, it has become a favorite among router hackers.
You can basicly use the fonera to serve as a wifi router and connect to it with the iPod Touch. Then you should be able to send it simple command line commands to access its 5V GPIO lines. You have 4 lines you can access + a serial port. If the 4 Lines arent enough, you can add an Arduino (or a multiplexer) and add more I/O ports
EDIT: I google for Fonera + Ipod and I got this link, which seems pretty much like what you are trying to do: http://blog.fonosfera.org/la-fonera-20-a-home-automation-device/