This is an incredibly easy thing to do as it has already been done by an expert hacker. All credit for the following hack goes to hackulo.us.
1. First of all you need a jailbroken iphone or ipod touch on a firmware of 2.0 to 2.1 If you have not done this i have posted a hub on how to do so, so go and check it out.
2. Launch cydia
3. Press the manage button on the bottom; then press sources.
4. Press the edit button on the top right corner then press the add button which appears on the top left corner.
5. Type into the box that appears; cydia.hackulo.us, then press add
6. Wait for it to refresh
7. Press the search button on the bottom, find and install the following applications;
8. Press the home button after they have been installed and go onto AppShare
9. Search for an app you wan off the app store and if it has been hacked it will appear
10. Scroll down to the bottom and press download (if there is more than one version click on the latest one)
11. Select one of the iphone friendly links (they are ipod friendly aswell)
12. Press download and wait
13. When it has finished press the home button and then launch installous or press the little button that says installous at the bottom of the AppShare screen
14. Select the app you want to install and press install.
15. when it has done press the home button and it will appear on your home screen.