4G iPod Touch Wi-Fi overheat + Screen Problem

I recently acquired this 4th gen iTouch, and it's safe to say that I'm in love with the product (I'd had a 2nd gen itouch before). However, after a couple of hours of messing around with it (just downloading apps/browsing websites) I noticed the back got sort of hot. I know this is a common problem (if one may even call it that), but that's not what bothers me. What does, however, is that whenever my iTouch gets a little warm (I'm guessing it's because of the Wi-Fi, since it gets hot around the top right corner, where the camera is located) parts of my screen (around the top) stop working. Also, when this occurs, floating a finger above said area makes the screen react without really touching the ipod.
Is this normal? What do i do to fix it?

Yeah, all I was doing really was playing a game for 30 mins and my ipod got pretty hot all of a sudden.
Also: I kept it turned off for an hour or so, to see if it would start working normally again, but not only is the screen still unresponsive towards the top, but it says i'm connected to Wi-Fi but Safari (and every other app) tells me I'm not. :/

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