What happen to my app , If i restore my ipod touch

I have problems with my ipod touch and i want to restore it.
so if i do that :
1.do my ipod turn to version 1.1.1 and do i need to pay if i want
to make it back to 2.1 ?
2.do i need to pay the apps that i installed last time, after i restore?
thax

Hello and Welcome to Apple Discussions. 
As long as you use your normal iTunes library to do the restore, the iPod will be put back as it was before as it will do a backup first. You might just wish to upgrade to 2.2 as in many respects this will be similar to a Restore (click Update on the Summary tab).
regards
mrtotes

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