IPod Touch 4gen internet connection issues

It is quite normal to see a real difference between 802.11b, g and n wireless networks. The maximum network speed you can reach on this 3 different standards are:

IEEE     |        max speed        | ratio relative
standard |  radio     |  practical | to 802.11b
---------|------------|------------|---------------
802.11b  |  11 Mbit/s |   5 Mbit/s |   1
802.11g  |  54 Mbit/s |  25 Mbit/s |   5
802.11n  | 270 Mbit/s | 120 Mbit/s |  24

On the other hand, 802.11b, g and n use different radio channels. You may consider these channels as different roads with different speed limits and different amounts of traffic. Some of these channels may be free when others may be congested.

Your problem isn't a problem, but rather the radiowave reality. If you want to see it and even bring it under control,
I advise you to use iStumbler. This is an invaluable tool for wireless network tuning.

This is currently a known issue that lots of Lion users are reporting. The average seems to be 2 wifi dropouts per hour.

The current work around is (as you discovered) to toggle AirPort on/off.

This particular issue seems to be getting alot of attention so I'd expect a fix soon.

Apple support forum topic about this issue