It can, yes. I use the free 'Airfoil Speakers Touch' app because I already have
Airfoil but I think also that 'Simplify Media' does the same sort of thing without the airfoil client, so is much cheaper, but I haven't tried it. Though for £3.49 it's probably worth a punt for you...
EDIT - though having just started streaming Spotify to my iPod, getting a lot of breakup (my wireless network is being trunky lately)