If your iPhone or iPod touch ever locks up on you to the point where you can’t seem to reboot the thing or get past the Apple logo, you’ll be just fine. Lucky for YOU, Apple has built in a failsafe recovery mode, so no matter what you do to the thing, you can at least get back to factory settings. Just hope you have a recent backup!
First, it’s impossible to permanently screw up the software inside (at least, I haven’t heard of any “permanently bricked” units). In fact, I hosed a jailbreak the other night and recovered from it just fine.
Second, it’s insanely easy to unbrick.
1.) Plug the USB cable from your computer into the device and open iTunes.
2.) Put the device into “recovery mode”.
This is done by holding down both HOME and SLEEP/WAKE buttons (shown below) for 8 seconds, then simply releasing the SLEEP/WAKE button while still holding the HOME button for another 8 seconds.
If you did it properly, iTunes should display a message that it found a device in recovery mode. Your computer may also make the “new device found” sound. If this doesn’t work, simply repeat the process of holding both buttons down for 8 seconds, then releasing the top one while still holding the bottom one for another 8 seconds.
This built in failsafe is what actually “unbricks” the device, just with the small catch that you have to restore the device. There’s no actual way (that I’m aware of anyway) to take it out of restore mode once it’s active other than by restoring a backup through iTunes.
3.) Restore the device.
In iTunes, select “Devices” in the menu on the left, and click “Restore” on the summary screen. iTunes will prompt you that it has to download and apply the latest firmware, but from here on it’s a typical basic restore and you shouldn’t have any issues.
If you don’t already have the firmware, iTunes will download it for you. It’s around 300 megs, so it’ll take a few minutes depending on your internet connection.
You will be at “Restoring iPhone software” and “Restoring iPhone firmware” for a while, so that part takes a little time with waiting. (Same should apply to the iPod Touch as well).
4.) Restore your backup.
That is, if you have one 
Once everything is restored, there should be an option to restore from a backup right there on the main summary page.
Your iPhone/iPod should now be restored back to exactly how it was before it was bricked!
If by some chance you encounter an error during restore, especially the annoying-as-hell 1604 error, read “How to fix the iPhone/iPod Touch 1604 error in iTunes“