I posted a piece about using Runkeeper on my iPod Touch and the inaccuracy of the tracking I experienced with it. Given how well Runkeeper works on the iPhone, it can't be the app that's got the problem, it has to be something to do with how the device itself accesses its location.
Now there have been one or two occasions in the past when my old 3GS iPhone would produce a sudden leap off my know route leaving me both confused and with a PB unlikely ever to be beaten! That aside, I think I may have a handle on the issue with the iPod.
Reading an article about how to use your wifi only iPad or iPod to navigate around a city, it appears that these devices use a map of local hotspots to track your location. According to the article you can use your map to navigate simply by setting a route between to points while you are using say a local hotel's free wifi. Once you've done this, your device loads a database of all local hotspots.
So, if it's using hotspots rather than GPS (which might be a feature only available via the cellular data network I'm thinking), that would explain why it jumps around so much because it's not actually tracking your true position but rather the location of these hotspots. And if that is true, then the iPod will never be useful as a route tracking device which is a shame, but at least it gives me a wider range music to which I can listen while I run or walk.
The moral of the story is: If you want to listen to music, buy an iPod Touch, if you want to track your route, buy a GPS device!