We just set ours up and the itouch stays in it just fine. I put the cord down into the slot and then it keeps it in there securely.
No, but be VERY careful as my daughter's itouch fell out which led to the screen cracking. I called the company who said the mirophone is not designed to protect or secure your ipod it's only purpose is to sit it there... seems like a lazy approach since the products main purpose is to play music and the ipod is it's only source. Keep the itouch on the ground or risk paying more to get that fixed than the cost of the stand.