Right now I have a 2G iPod touch running 4.0 firmware that was jailbroken by PwnageTool. I would like to update to 4.2.1 and then jailbreak from there, but would all of my apps downloaded and their scores and settings (such as scores from Angry Birds) be carried over or would I lose all that information if I upgraded and then jailbroke with greenpois0n? Thanks for the help!
That information could be saved by restoring from backup through iTunes, or using a Cydia-based backup tool like DataDeposit, iBye, or xBackup. Otherwise, however, it will be lost.
Please note that restoring your firmware and re-jailbreaking at 4.2.1 will wipe your iPod completely clean--the backup(s) will have to be done beforehand and used to restore your personal data.