Just thought I throw this out here in case someone else has the problem and does not feel like plowing through the hundreds of comments on other sites. My lovely little iPod Touch decided that it did not want play networking anymore, going into the settings menu yielded the message No wi-fi and the wi-fi menu was not even available, it was disabled for some reason. Very annoying as I had to go check twitter, withdrawal symptoms were setting in.
Well, thankfully the solution was pretty simple, just enter the Setting menu, then choose General, spin to the bottom and choose Reset. Now choose the Reset Network Settings option and the menu should be enabled now. Unfortunately you will have to reenter your long and nasty key but it will after that which is the goal.