Overall, the iPod Touch had excellent audio performance; we found in our tests that sound was cleanly reproduced without distortion or other problems. We did not like the included headphones, though; the standard Apple earbuds produce weak sound and don't block outside sound. Bu fortunately, the iPod Touch has the output power to drive a decent set of headphone, and the audio quality to make this a worthwhile investment.
Frequency Response (9.64) 
The first aspect of performance that we look at is frequency response; how well does the media player play back the wide range of frequencies that modern music is composed of? We test this by playing back a special sound that contains the tones, while our testing system keeps an eagle eye on how loud the tones are.
Our ideal here is a flat line, which would indicate that all frequencies are played back at exactly the same level. The iPod touch did extremely well here; the frequency response curve is flat along most of the frequency range, with just a slight bump at the higher end. This means that it plays back all frequencies equally; there are no issues with some frequencies being overly exaggerated or suppressed.
Distortion (8.17)
Distortion is a technical term for when things just don't sound like they should; it's where the waveform that is output is different from the original sound. These changes can be caused by things like cheap nasty amplifier chips or a problem with the way the player decodes the audio. We didn't see any big issues with distortion with the Touch, though; the distortion that was present was very, very minor, and it did an excellent job of playing back the music in the way the producer intended.
Crosstalk (8.51)
Crosstalk is where the sound destined for one side of the headphones gets into the other. It happens because there is always some electrical or signal leakage inside the player, but the amount of cross talk was very minimal on the touch; we found an average of about -88.35 decibels of crosstalk, which is low enough that you are very, very unlikely to be able to hear it.
Output Power (7.87)
The ability of an MP3 player like the touch to drive a bigger set of headphones than the included ones is determined by the output power; how much energy can the media player output? The more output power it has, the better job it will do of driving a bigger, higher impedance set of headphones. The iPod Touch was not lacking here; we measured the output power driving a 10 ohm reference load at 30.6 milliwatts, which would be enough to drive all but the biggest, baddest headphones out there. We confirmed this by trying the Touch with a pair of Koss K501 studio headphones, and the Touch was capable of producing a good level of volume in these high impedance headphones.
Noise (9.84)
We found very low noise in the iPod Touch; the noise that was present was extremely low. We test this by measuring the signal to noise ratio, which is the ratio of the level of the signal (the music) against the noise (which we find by playing back a silent file and measuring the level) was 93.01 decibels. The bigger the better for this, so the iPod Touch has very low noise.
Included Headphones (3.30)
The headphones are the final part of our testing. We don't expect much from the headphones that come with media players; they tend to be cheap and nasty ones that are more designed to keep the cost down than to sound good. Apple seems to stick with this philiosphy for their standard iPod headphones, which come with the Touch; we found that while the could handle plenty of volume, they added significant distortion to the music, particularly at low frequencies. They also did very little to block outside sounds; noises around you are almost as clear with the headphones in your ear as with them out. And they leak a lot; we could clearly make out the music playing over them from several feet away.
The iPod Touch is definitely a MP3 player that would benefit from an additional investment in a better pair of headphones, and Apple themselves have spotted this niche and are now offering a pair of $79 in-ear headphones. And a better pair of in-ear headphones will also do a better job of providing a better degree of privacy.
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