You are probably going to need 2 things. 1. New LCD screen. 2. New glass/ digitizer. I believe most kits online come with instructions and the items necessary to pull the old glass off so you can service it. There are a bunch of kits on Ebay. It will probably run you roughly $30 total for everything. You need to determine what generation Touch you own, as those kits are specific to to each generation (1st, 2nd, 3rd). Here are some examples:
2nd gen Ipod Touch LCD screen:
http://cgi.ebay.com/NEW-LCD-Screen-R...item33574a8ae3
2nd gen Ipod Touch Glass and Digitizer:
http://cgi.ebay.com/IPOD-TOUCH-2ND-G...item2a06ca50bd
As you can see, it's not very expensive. Might be worth trying to fix this yourself.