I found this on another site and it should fix the problem
"....I also have the 1st generation ipod and was also missing the volume slider. Here are the things I did to get it to work again....
1. Power off
2. Power on holding the power and sleep buttons until I saw the apple symbol.
3. Unplugged and plugged back in my headphones.
4. Slider appears only when headphones are plugged in....."
Worked like a charm. Literally - plug the earphone into the jack. Turn the iTouch off using the sleep wake button (i.e hold until you get a red slider) and THEN when you turn it back on, WHILE the apple symbol is still showing, unplug the earphones and put them back IMMEDIATELY (Apple still showing). I heard a noticeable difference in sound as soon as I did this - and when the iTouch finished rebooting I went to music and there was the slider and the volume was back to normal! :-)