ran into this while helping a friend with kids ipod touch...
connected to my home wifi fine, on his router it would say connected and the icon
would just spin for ever....
look at your wifi connection when it's spinning...
I had no DNS and no DOMAIN from his router...BUT did have
an address...........on my home setup DNS/DOMAIN were fine..!!
so I checked one of his other devices on his setup, got the DNS / domain
went back to ipod, looked at connection, touched dns and it allows me to input
the values I got when looking at his other device, same for domain information...
restarted everything and it connected and worked fine...
don't know why the ipod isn't getting the DNS/DOMAIN from router but
assume it's some setting...didn't have time to research it futher as they just wanted
it working....
so try that on your home network....!!!!