Hello. Posted below are some suggestions that may assist.
1. Un-sync all music from the iPod Touch and then proceed to step 2.
2. De-authorize and Re-authorize iTunes Store account
About iTunes Store authorization and deauthorization
http://support.apple.com/kb/HT1420
3. Now Sync music back to the iPod Touch.
4. Reboot iPod Touch if needed, Hold down the home button & sleep/wake button till you see a silver apple logo. Once iPod Touch is up and running check for album artwork.