iPod Touch has the same dock connector as the current Nano and Video iPod so it should connect, although I'm not sure how it will fit size wise into the slot in the armrest.
It's very tight, without a case on, and sits a bit too proud to allow the armrest to close. Also, it's only tight on the sides, not the face, so is free to wibble wobble around. However a USA company called CableJive to a cable which extends the dock connector. Works out at about £21 including shipping, and takes a week to get here.
I bought the cablejive cable. Just back after plugging it into the OEM iPod Preparation in my centre armrest. Connected my 32GB Touch to it and all worked well. And there's enough space inside the armrest to sit the touch on it's side, still in it's InCase case. You gotta push a couple of loops of cable into the OEM dock to make space, but this also helps ensure the cable won't pop off the connector in the dock... space is so tight that it's a bit tricky to get it onto the dock you see.
Obviously, you still can't navigate music from the ipod itself since it stills says that an accessory is connected, but no surprise there. Still, easier and less precarious that putting the touch directly onto the OEM connector, and you can now close the arm rest.