Hello, new guy, new problem...I have a iPod Touch 2G, and i've had it for quite a long time...today though, (and on rare occasions) after not bieng charged for a long time, I got the recovery mode icon...it isn't jailbroken (I don't intend on jailbreaking). I've rebooted the iPod, but I'm wondering if I should have backed up my files on the iPod...I can't remember when the last back up was, but I didn't back up the most recent files...
It's probably not worth replacing until the next gen comes out. If you are going to upgrade, might as well get the best.
Back it up to iCloud, restore it with iTunes, and use the on-device setup to restore it to your iCloud backup.
Missed that, back it up to iTunes (right-click > Back Up) and then restore, then choose restore from backup.
When my 2nd gen touch began to do that it was sign that the battery was on its last legs. It became useable only if it was connected to a power source. After trying to find a local repair service to replace the battery I bit the bullet and upgraded to a 4g model. The next gen touch has been rumored for some time; whether it's worthwhile to replace it now or hold on for a while is up to you.