Yes, HeyTell works from iPod Touch to iPod Touch. If using Medium or High privacy, you can connect using email (if email is set up on the iPod), or you can set privacy to Low, connect using matching...
TextNow, Text+ and Skype are all good FREE apps that you can both text other ipods and phones. Many people say Skype costs money and it does . I use all of these, they all are great but I recommend...