Have you gotten it onto your iPod Touch yet?
If so (for iOS 5),
1) Tap the Photos app.
2) Navigate to wherever the picture is.
3) View it.
4) Once it is displayed, tap it so the menu comes up.
5) In the lower left corner there is a little box with an arrow coming out of it. Tap that.
6) A menu should come up. One of the options is: Use as Wallpaper. Tap it.
7) Tap Set (since the 640x900 is already scaled properly).
8) Set it to either the Set Lock Screen, Set Home Screen or Set Both.
9) You're done.
Other iOSes might have slightly different directions.