Yes you can but i wouldn't upgrade past 4.0.1 for the fw upgrade. Spirit and jailbreakme. com would be you two best bets. Iclarified will have the 4.0.1 fw to download (google the fw and iclarified name and it will show you) hold shift key and then rightclick restore button in itunes and it will want the fw to up/downgrade. Use the one you grabbed and let it restore. Use 1 or the other to jb and dont forget to let cydia to ' make your life easier' as it will save your shsh blobs to its servers for a possible dowmgrade at a later date. (if it was able to save it due to apple no longer signing that fw anymore) cheers
jailbreakme.com has not been working for at least a week now and he would need SHSH to be able to restore to 4.0.1.
Best bet for a iTouch 3G is to update to 4.1 and then use limera1n/greenpoison/redsn0w 0.9.6b4 to jailbreak. I find redsn0w to be the most stable one, but limera1n is the fastest and easiest to use.
You should also save your SHSH with tiny umbrella while Apple is still signing 4.1 if you havent done so already.
Also make sure you have the latest version of itunes before doing anything.
Lol....i did mention about the shsh scenario. and ichecked the jbm.com site and it opened for me. told me that my fw is too nrw .. Etc, etc.... O also mentioned he should research and check things out before he does something he might not have any idea about. and he SHOULD NOT upgrade past 4.0 and use 1 of the appropriate methods.
jailbreakme.com comes up fine but when you go to jailbreak it fails. Has been that way for over a week now.
You only mentioned the SHSH for after he jailbreaks. If he does not have them for 4.0.1 then he wont be able to install that firmware in the first place. Since he said it has not been previously jailbroken there is a very good chance he has never saved his SHSH before so would only be able to get 4.1 and 4.2.1 SHSH right now so your options will not be available to him.
Also 4.1 is perfectly safe for a iPod touch 3G as there are multiple tools now to jailbreak it. He should stay away from 4.2.1 for now though since that would be a tethered jailbreak on his device.