I am sad to say that currently there is not a legit way to turn off Auto Complete on the iPod Touch. Many people might recommend to Jailbreak the Touch so you can modify anything including the auto complete functionality. In my opinion Jailbreaking your iPod Touch should only be done if you have way above average technical skills so this would rule out most people.
There are a lot of people who claim all you need to do is SSH or FTP to your Touch or iPhone and you can modify a file and turn off auto complete. You can only SSH or FTP to your phone if it is jailbroken. Again I would not recommend doing this unless you either have a spare Touch/iPhone or your technical ability is above average.
Not to worry it looks like Apple will be releasing software version 2.2 for the iPhone and Touch that will provide an on/off toggle for auto complete. This will be a welcome configuration for me as I prefer to spell check once I am done typing the email, text message, etc. There are many other cool features in the new software being released by Apple however the most important to me will be the ability to turn off Auto Complete.
One way people say to keep down on the amount of corrections the auto complete software will trouble you with is to type in a letter and then move the cursor to the left of it and begin typing your message. Once done with the message you will delete the first letter input into the message. This definitely helps but is a pain so it will be nice for the on/off toggle of auto complete in version 2.2.
If anyone has further information regarding either the new Apple software update version 2.2 for the Touch or if someone has other ideas for turning off auto complete please send me a message.