According to wikipedia (http://en.wikipedia.org/wiki/Ipod_touch#Models) there is actually a difference in processors for the 1G/2G iPod Touch:

1st generation: ARM11 620 MHz (underclocked to 400 MHz, then 412 MHz)

2nd generation: ARM11 620 MHz (underclocked to 533 MHz),[1] with internal ARM7 core for Jazelle acceleration

This seems inline with my experiences. My 1G ipod touch seems slower than my sister's 2G.