Before you leave for your trip you'll need to install an offline mapping app like "CityMaps2Go". You need offline maps because you will not actually be connecting to the internet while you are doing your sightseeing.
When you arrive in a new city you'll have to find a hotpot (hotel, Mcdonalds, Starbucks etc) and connect to the internet. This is the one and only time you need an internet connection.
Open either the built-in Apple "Map" app, or the Google Maps app, and open-up the "directions" option. Now enter any two points in the city, like from the train station to your hotel, or between any other two points of interest.
After the app gives you directions the device will automatically load a database (from Apple) of all Wifi hotpots in the entire city! That database will now reside in the memory of the iPod Touch even after you exit Google Maps, and until you reboot the device. Any other app that uses the location service can now access that database.
At this point you no longer need to be connected to the internet, but the device must still be in Wifi mode. As you are walking around the city the device will be detecting Wifi hotpots (but not connecting to them), the device reads the hotpot's MAC serial number and in the background looks up the hotspot's coordinates off the database, and is able to determine and show your exact location anywhere you are in the city with an offline map app like CityMaps2Go.
I've now used this feature successfully in Budapest, London, the Big Apple, Toronto, Amsterdam, Beijing and Hamburg. It's very accurate, determines your location in milliseconds, and I haven't come across in gaps in coverage.