will OS 4.0 work on iPod touch 2nd generation?

It is for all iPods/iPhones touch.

But certain features will not be enabled depending on the model.

Obviously the later 3Gs models and ipad will be getting all the features that people are craving for.

Note that iOS 4 won't work on 1st Generation iPhones or iPod Touches due to the overhead. If you want iOS 4, you can either wait for the 4th Generation iPod Touch to come out, or just get an iPhone 4. However, I did notice a slight performance issue with my 2nd Generation iPod Touch, but it doesn't affect the operation too much. If you experience performance issues, just reset and you'll be ok. If you've upgraded to iOS 4 on your iPod Touch 2nd Generation, you won't able to use the wallpaper feature on the Home Screen or take advantage of the multitasking feature. If you have the 3rd Generation iPod Touch, or, better yet, an iPhone 4 then you can use all the features.