I'm pretty sure you are mistaken here. Cydia is free and the iPod Touch update isn't..
In which case you can just download the firmware for free from here
Just make sure you get the right firmware for your model (1G,2G etc) .. And then blackra1n (3.1 +) or use redsnow (3.0 and before) the iPod to get Cydia.
http://www.felixbruns.de/iPod/firmware/
Oh and for blackra1n, this is from the creators twitter page: