Reports are coming in of iPod touch users having graphics glitches after updating to iOS 4.3. As you can see in the picture here and in this video, the problem looks like overlapping icons and "interference" on the screen.
There's a growing thread on the Apple message boards of fourth-generation iPod touch users who aren't happy. Resets and factory restores don't solve the problem, it seems, and users are looking to Apple to fix the problem with an update soon.
"I've noticed in the lock screen, certain notifications seem to have some sort of flash thing (almost looks like it's blinking in some cases)," says one user. "Similar to other posters in this thread. After rebooting it many times, the same issue is happening."
"The graphics for some reason have a snowy and animated outline," says another. "This iPod is not hacked or dropped or anything I don't understand why this is happening. I've turned it off and turned it back on and still having the issue. It is NOT a major issue, it is odd though and having issues with the display on this type of device still can't be a good sign right?"
No, it's certainly not a good sign, since the display is pretty much the only way to interact with an iPod touch in the first place. Here's hoping Apple figures out what's causing this and issues a fix.