I don't understand why Apple would offer damage protection on iPhone and iPad, but not on iPod touches? Unless Apple offers a replacement model for $149 ($99 plus $49 deductable), then I don't see the point. However, I still think it makes the purchase decision a lot easier on parents knowing that a $300 or $400 device can be protected in case of accidental damage.
That question would be more appropriate for Apple support. All of here are only end users like yourself and can only speculate as to why it's not being offered for the 5G iPod Touch. However, speculation of Apple products and such are prohibitied on these forums. Sorry.