It should be dry by now.
Place the iOS device in Recovery Mode and then connect to your computer and restore via iTunes. The iPod will be erased.
iOS: Wrong passcode results in red disabled screen
If recovery mode does not work try DFU mode.
How to put iPod touch / iPhone into DFU mode « Karthik's scribblings
For how to restore:
iTunes: Restoring iOS software
To restore from backup see:
iOS: How to back up
If you restore from iCloud backup the apps will be automatically downloaded. If you restore from iTunes backup the apps and music have to be in the iTunes library since synced media like apps and music are not included in the backup of the iOS device that iTunes makes.
You can redownload iTunes purchases by:
Downloading past purchases from the App Store, iBookstore, and iTunes Store
Apple will exchange your iPod for a refurbished one for this price. They do not fix yours. It is likely not worth it if yo have a 1G or 2G iPod.
Apple - iPod Repair price
Apple will give you a 10% recycling discount if you turn in an old iPod when you purchase a new one.
Apple - Recycling Program for iPod and Mobile Phones
