Try:
- Resetting the iPod:
Reset iPod touch: Press and hold the On/Off Sleep/Wake button and the Home
button at the same time for at least ten seconds, until the Apple logo appears.
- Restoring the iPod from backup
- Restoring the iPod to factory defaults/new iPod.
If you still have the problem it is very likely due to a hardware problem. You can make an appointment at the Genius Bar of an Apple store and they may be able to help. However, I doubt it is covered by warranty since the warranty does not coeraccedents lijke dropping it. You can also try fixing it yourself using these instructions:
iFixit: The free repair manual