There is no true, built-in iPod touch GPS functionality in any model of the touch. The touch doesn't have the hardware GPS chip or cellular phone network connection that the iPhone does. Instead, the iPod touch's location service uses nearby Wi-Fi networks to pinpoint the approximate location of the iPod touch (which means, if there's no nearby Wi-Fi network, the location awareness features don't work) .
So, if there's no built-in iPod touch GPS, what are your options for GPS functionality on the touch?
iPod touch GPS Apps
Apps alone won't add true GPS functionality to the iPod touch. That's because apps can't replace the functionality of the GPS chip or the information downloaded from a cellphone network. Apps running on the iPod touch can be location aware using WiFi networks, but they aren't using true GPS.
iPod touch GPS Hardware
The truest way to use GPS with the iPod touch is by adding accessories that include GPS chips. Fred Zahradnik, About.com's Guide to GPS, has a roundup of some of the best GPS accessories for the iPod touch.