there are contacts between the wifi antenna and the logic board your 1st gen iPod touch - these contacts just join with pressure, not soldered or permanently connected. I'm guessing that when you dropped your iPod you may have dislodged the connection to the antenna?

I suggest opening up your iPod and checking the connections.

take a look at the 4th photo from the top in these pictures, or in the repair guide, about step 5.