We have always used a Griffin brand FM transmitter, but the quality has gone down over the years. The FTC has cracked down on how much "juice" (LOL my technical term) they can put out and the newer models don't work as well as the older ones. And you have to find a really empty frequency on the radio which can be difficult as well.
If you have a tape deck, a good approach is a transmitter that works with a cassette tape.
We just bought a bluetooth FM transmitter to use with our phones, but that only works if you have bluetooth - I don't believe regular iPods do, only the phones - maybe the iPod touch has that? I've only used it once so far and it seems to be working well.