Screen has horizontal solid white lines
Screen has horizontal solid lines, unreadeable items
iPod touch, Screen not function correctly
Screen has horizontal solid lines, unreadeable items
iPod touch, Screen not function correctly
You can work through the five 5 R's of troubleshooting.
http://www.apple.com/support/ipod/five_rs/
It might also be a good idea to let the iPod's battery fully drain. Then charge it back up and restore it once more in iTunes.
Otherwise, it's likely a hardware issue with the iPod's LCD display, meaning you'll need to take or send your iPod in for service either via Apple or a third party repair service. Here is Apple's repair pricing.
http://www.apple.com/support/ipod/service/prices/
Note that they don't actually repair the device, but exchange it for one of the same generation, model, and capacity. A third party service will actually replace the damaged part for a little less. Google "iPod screen repair" and you should get a number of results to work with.
B-rock
Screen has horizontal solid white lines