Securing my data when recycling iPod at the Apple Store
Yes, your backed up data in iTunes from your 2nd gen iPod should be able to be restored into a new 4th gen iPod, based on my experience upgrading from a 1st gen iPod Touch to an iPhone.
Regarding clearing data, check out this ZDnet blog post. It includes information about the Erase all Content and Settings option that you can use to wipe the iPod, including a quote from Apple Support. More specific details for all Apple iDevices can be found on this Apple page.