IPod touch stopped playing the Pandora app with the following error: “Cannot Connect to Pandora”

I suggest you restart your box to make sure that it’s just not a problem there. You could technically turn off the AirPort and turn it back on (that’d restart most of the stuff), however the “problem” could be on the Kernel level, which would only be fixed with a proper restart or even a hardware buffer, which a cold shutdown would most likely fix.

In any case, if you still want to experiment, try changing the Channel from Automatic to something you can use in your country and move it, maybe somebody (neighborhood?) brought new devices or networks next to you and that causes new interference that wasn’t there two days ago.

It sounds like the iPod has restored from backup incorrectly, I would do a factory reset and then sync again as a new device.

You will then need to select what apps, music etc you want to sync. It may be worthwhile deleting the first backup to stop this coming into play again.