If you forgot your screen-lock password
Connect the iOS device to your computer and restore via iTunes. Place the iPod in Recovery Mode if necessary to allow the restore.
If recovery mode does not work try DFU mode.
How to put iPod touch / iPhone into DFU mode « Karthik's scribblings
For how to restore:
iTunes: Backing up, updating, and restoring iOS software
To restore from backup see:
iOS: How to back up
If you restore from iCloud backup the apps will be automatically downloaded. If you restore from iTunes backup the apps and music have to be in the iTunes library since synced media like apps and music are not included in the iPod backup that iTunes makes.
You can redownload iTuns purchases by:
Downloading past purchases from the App Store, iBookstore, and iTunes Store
