Does his happen to all WiFi routers? Try to check other WiFi hotspots to see how does your iPod Touch works. Do you have case and if there is what type is it around the iPod Touch? The WiFi antenna is black spot on the back on the other side of the power button so make sure there is nothing metallic covering that area. I'm using iOS 5.1.1 (which is the current version) with my iPod Touch 4G and I have no problems with WiFi connecting to my router which is about 5 meters away so I don't think downgrading would do anything to the WiFi connection.

Make sure that the trackpad is dry since this symptom of jumpy cursor. A moist trackpad causes the capacitance that the trackpad use to know where your finger is to see the moisture as a "false finger" thus the the jumpy cursor.

The fuel line at either the O-rings between couplings have worn out and letting fuel around it, or one of the flexible fuel line (most made of rubber material) have have failed for whatever reason and allow fuel to spill out. The cause of this could be high temperature deteriorating the rubber lines, wrong material of the O-rings & flex fuel lines which certain types of fuel additives could cause deteriorating of the material, improper connection of the fuel line which cause the fuel connection to fail. You should bring it to the dealer or reputable auto mechanic that has access to Technical Service Bulletins (TSB) which are reports to US Department of Transportation by the auto manufacture for all recalls & repairs to check this problem out since it could be part of a bigger recall which is a free repair even though the vehicle is out of warranty.