I have an IPod touch, I just loaded the free application "PANDORA", it's completely free for download from the ITunes store, and yes, it works great. For the app to work, of course, your IPod must have an interconnect connection. I'm delighted you asked this question, I'm emjoying commercial free streaming audio off my Ipod now and would not have without your question.
Enjoy!
Rpg
Enjoy!
Rpg