Hack: iPod Touch as Mass Storage Device
As if you need one more device for storing files you eventually can never find, the iPod Touch can now be used as a USB mass storage device.

At this time, the following hack only applies to MacFanBoys – I’ll post a PC solution when found.
Per TUAW:
You know that “Enable disk use” checkbox? The one that appears in iTunes for most modern iPods? That checkbox isn’t there for the iPod touch. The touch provides no built-in disk access utilities but if you have an Intel Mac, and aren’t afraid of the command line, you can use these Media Folder utilities to copy files to and from your touch.
Note: To follow updates jump over to TUAW.
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