The issue appears to mainly affect fourth-generation iPod touch devices. Users are reporting different variations of the problem, but they all come down to random distortion with what is being displayed on the screen. Some have uploaded video examples of the problem on YouTube:
During the iOS 4.3 testing phase, none of the three beta releases had this problem; it appears to only be present in the final ''Golden Master'' build. Users experiencing the problem have urged others to report it via the iPod touch feedback page.
Apple has yet to publicly acknowledge the issue. In the meantime, resets and factory restores don't appear to do anything, so users are waiting for a patch from Cupertino. If you have an iPod touch and have upgraded to iOS 4.3, are you affected?