It seems a recent OS upgrade changes AudioSession behavior on the iPod Touch, making Slice grumpy and silent. This is most ill-timed, and we apologize. A fix is in the works!
UPDATE: the iPod-loving version 1.1 has been submitted to Apple on Nov. 9, and should be available within a couple of weeks!
In the meantime, Slice will reportedly work on your iPod if a headset with a microphone is plugged in.