You have to reset your network connections on your iTouch.
Go to Settings >> General >> Reset >> Reset Network Settings >> Enter your iTouch Passcode >> hit the red "Reset Network Settings" >> Go back to "Wi-Fi" in Settings.
Try connecting again. The IP Address, Subnet Mask, Router and DNS fields should not have entries in them.
And by the way, is the internet connection you are attempting to connect to, secured? Like does it have MAC filtering etc? Or is it as a public place?