Is it possible to change the font on the iPod Touch and secondly, does it sync automatically with the Notes folder in my Mail program (there are no Notes settings on the iPod?
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No, I'm pretty sure there is no way to change the font on the Notes app. But yes, it does sync with the Notes in Mac OS X which show up in both Mail and iCal. There are a lot of 3rd-party notes apps as well, like Evernote, that let you change the font and also sync back to your Mac.
You might need to do some kind of jailbreak. I
wrote this with a first gen iPod Touch, and I don't think you can do it without a jailbreak.