Ok, according to the thread here:
http://www.ipodtouchfans.com/forums/...ad.php?t=59310 , ZodTTD might start developing DOSBox for the iPhone and the iPod Touch.
With DOSBox you will be able to install Windows 3.11, Windows 95, and Windows 98 (the last two i think rather slow). But, you must be asking yourself, "didn't he said WinXP?". Well if this application is done sometime, you could install Windows 3.11 and install Calmira in it. Calmira is an addon for Windows 3.11 that makes Windows 3.11 look like a newer Windows. It has versions for Windows Classic, Windows XP, and even one for Windows Vista (which doesn't actually look like Windows Vista in my opinion, but the XP one makes the trick).
Anyway, when this is possible, your iPod Touch might eventually look like this:

(That's an actual Calmira Screenshot)
It will also run at considerable speeds because this is Windows 3.11 and not 98

.