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Hi, you can't really create a playlist on the ipod touch without creating it in iTunes.
1. You open itunes on your computer.
2. Click the add button in the bottom left of the itunes window.
3. Make a name for that playlist and put songs in it.
4. Connect your device and sync in the music tab.
IMPROVED:
The top answer isn't completely true, you absolutely can create music playlists directly from your iPod Touch. Go to your Music, then on the bottom left corner is the "Playlists" icon. Tap on that, and then you can go ahead and create a playlist from your entire music library. On some iPod models, e.g. the Shuffle, you will need to create playlists on iTunes. But iPod Touches are easy to create playlists.