While the new iPod Touch strongly resembles the current iPhone (minus the phone), its language capabilities seem considerably greater. The tech specs indicate the user interface is localized in English, French, German, Japanese, Dutch, Italian, Spanish, Portuguese, Danish, Finnish, Norwegian, Swedish, Korean, Simplified Chinese, Traditional Chinese, Russian, and Polish. Keyboard input (only English in the iPhone) adds French, German, Japanese, Dutch, Italian, Spanish, Danish, Finnish, Norwegian, Swedish, Polish, and Portuguese. Dictionaries for predictive typing are available for English, UK English, French, and German.
To get accented characters, you hold down the key of the base letter.
Whether any additional languages are supported for web browsing and song info display is not known yet.
The upgraded standard iPods have no additions to their language support, described here, despite many requests for Hebrew, Arabic, Thai, etc.