After several restores and many failed attempts, I think I have found a way to resolve the problem of keyboard hanging when you have your iPod jailbroken. But first, let me outline the details of how I got my keyboard hanging. When 1.1.4 firmware was released the other month, I immediately updated my iPod firmware to 1.1.4. For a few weeks everything went well. Now because of curiosity, I decided to freshly restore my iPod touch and use ZiPhone to jailbreak the unit. All was great, I installed BSD subsystem, OpenSSH, Services and BossTools. I also tweaked everything in my touch forcing the /var/root/ directory to be redirected to /var/mobile diretory so that I have more control with the directories where my Library and Media folders are located especially when I install more than 300 MB of applications and other files. I have successfully redirected the /var/root/ folder and its contents to the /var/mobile folder and all applications once installed will now use the /var/mobile folder to save preferences and settings. Say, when you install Erica's Utilities, if you will not redirect your /var/root/ folder to /var/mobile therefore the bin directory will be saved to /var/mobile/bin. When you install other applications especially those that are compatible with version 1.1.3 and higher of iPod touch firmware, its settings will be saved to /var/mobile/Library directory - just like the Summerboard themes. It means that you will have to main folders, root and mobile to save files and settings into. This makes a mess so and confusion especially if you would really look for items, settings, and preferences used by some applications, so I decided to clean this up. What I did was Restored my iPod to fimware 1.1.4 then used ZiPhone to jailbreak. Installed everything back (all Applications) and using iTunes, I restored my files from backup. When testing it with some files, I noticed that when I open Safari and try to type something to search in Google, my darn keyboard locks-up and I have to force my iPod to restart by pressing the Home and Power button simultaneously. Just this morning, while using the Lockbox, the same problem occurred. I noticed that when I opened my Contacts, my items are all gone. Using Finder, I navigated to /var/mobile/Libray/AddressBook and found there my database files for contact items. But why can't I see my contacts and why does my keyboard hangs every time I use it? So I decided to delete the contact database files and everything was A-OK when I restarted my iPod Touch. So, I'm outlining below how you can prevent this from happening to your iPod touch or even solve the lock-up problem if it has already occurred. I am not claiming that this is an infallible solution because I am not a programmer, merely a user trying to make my iPod better.

STEP-BY-STEP GUIDE (Using Finder.app)

1. Before doing anything, backup your files using iTunes by Syncing.
2. Open Contacts and see if you still have the old contact item. If yes, you may continue with the procedure, otherwise, I can't assure you that you will fix your iPod touch. Warning: This will erase all the contact items in you Ipod Touch but not in you PC.
3. Download and install Finder from Applications.
4. Open Finder and go to Settings.
5. Make sure that the Show ".." Entry is turned On and select Back.
6. Click the .. entry on top of the folder list until you have "/" directory shown on top, just below the clock.
7. Navigate to /var/mobile/Library/AddressBook folder and delete AddressBook.sqlitedb and AddressBookImages.sqlitedb files.
8. Exit Finder and restart you iPod Touch.
9. Use iTunes to sync back your Contact items by doing a Sync.
10. Try using the keyboard in Safari and pray it works fine now. Because if it ain't fixed yet, I suggest to do a clean Restore. And when asked by iTunes to restore from backup after the firmware restoration procedure, select NO.

NOTE: This method can also be done using WinSCP. For those who would like to know how I managed to redirect by root directory to mobile directory, just post your request here. Those who would want to do a clean Restore with tweaks on how to backup your files before doing the restore procedure, do post your request in this section of my blog. Your posts encourages me to continue doing my blog. Thanks to those who gave comments after finding the information here to be useful.