Hang on, i appreciate not being able to turn the device off means that it is technically faulty but by design it's not really meant to be turned off. It's meant to be locked which is effectively a stand by mode that uses very little battery.
Personally if i just had an Ipod Touch that wouldnt turn off i certainly wouldnt even be thinking about buying a new one?
On another note about actually fixing the problem.
Does the lock button actually work? If it does you may want to look on google for instructions on putting it into restore mode through Itunes. If the button is actually broke you don't want to be turning it off anyways?