I noticed the same issue with my iPod Touch 2G. I don't turn it off completely. I just put it in sleep mode and it would 'forget' its last play position when I return to it later. Sometimes it would remember the song, but only reset to the beginning instead of playing in the middle of the song where I paused it. Problem doesn't occur all the time or frequently. But it does occur often enough that it's pretty annoying.
Also, sometimes this issue also occur even when I don't put it in sleep. All I need to do is to run another app, then after finishing running the app, I try to continue playing the song where I left off before, and it would do one of the following:
1) reset to the beginning of the song where I paused
2) reset to beginning of the playlist where I paused
3) completely forget which playlist I paused in (no 'Now Playing' button on the top right corner when you run the music app)
I have firmware 3.1.3 running on iPod Touch 2G. Anyone know the solution to this problem?
"If I had my life to live over again, I would have made a rule to read some poetry and listen to some music at least once a week." - Charles Darwin
iPod Touch 2G 32GB | 4186 songs 15.80 GB 12 days