what do you do when your ipod touch 4g says connect to itunes through a usb?

This means that there is probably a software update that is available for your ipod. You should have received a usb to ipod cable with your pod when you purchased it. You need to connect the ipod to a Mac/computer's usb port, where it will synch with itunes and offer to download any available updates, or at least inform you as to why you received that message prompt.

You need to restore via iTunes on your computer. See:

iTunes 10 for Windows: Update and restore software on iPod, iPhone, or iPad