Basically I launched "Save SHSH" from TinyUmbrella (for the first time ever), and now n Saved SHSHs for iPod Touch list i get
iPod 3G 4.1
Does this mean I can downgrade to iOS 4.1? How is this possbile, I never saved SHSHs before.
Here's a helpful guide on using TinyUmbrella, SHSH blobs, and downgrading. Depending on your hardware, downgrading may or may not be possible. I haven't tried downgrading anything since iOS 5 beta on original iPad and iPhone 4. It worked in both cases, but I'm not sure what you have.
The version of iTunes may also play a role in your ability to downgrade. For instance, the latest iTunes may not allow you to restore a version of iOS prior to 5.
Sorry if this wasn't as solid an answer you were searching for. Maybe it'll give you a starting point to experiment, if you have the time though.