You want to restore your iPod Touch with iTunes, which is not the same as a reset.
3rd party app settings and data created and stored by a 3rd party app is included with your iPod Touch backup, which is updated by iTunes as the first step during the iTunes sync process. After selecting Restore, the first prompt is to update your iPod Touch backup. You can restore from the backup, or as a new iPod Touch or not from the backup.
This link provides the data that is included with the backup.