no problem, you can fix it!

I had same situation that my son dropped my iTouch into toilet, it was completely gone. then I took it to Apple store but they said it was accidental so it's not under warranty. I was upset, then left the iTouch in a dry area for a couple of weeks, let it completely dry. Then connect to my iMac, restore the system (I saw the guy in Apple store did the same for others) and sync all the files. Eeverything was back on. Now after a year, it still runs strong.

My suggestion to you: let it iTouch completely dry. If you have vaccume container, use it. It will speed up the dry process. Don't shake the iTouch, the water may spread into the display, it will take longer time to dry and will leave watermarks for quite some time. Don't turn out the power or charge it until you are sure it's completely dry (I waited for 2 weeks). Then connect to the computer that sync your iTouch and restore the system (OS) and sync your all files and applications. Your iTouch will be back on like new.

Good luck!