did you also upgrade the ipod touch?
i had issues with my iphone this morning eventually it connected and did all the updates, but it did take a long time.
was having the same problem on Windows XP plus iTunes and the OS would not even recognize the iPod Touch when connected. I was able to fix it by disconnecting my iPod Touch and then selecting from the menu Edit --> Preferences --> Syncing and clicking on the Reset Sync History. I then reconnected the iPod Touch and it went through a complete sync. I have been able to disconnect and re-connect my iPod Touch with no problems.
Under Win VISTA my iTunes (7.7.0.43) totally freezes when I plug in my ipod Touch (but the PC doesn't crash). Under Win XP (same iTunes) this doesn't happen. Under Win XP I can download (for AUD12.99) the ipod Touch v2.0 Firmware and begin to install it. Under Win VISTA I can't (because the iTunes is totally frozen).
I'm pretty sure it's the Apple USB driver not working well with Win VISTA. Under Win VISTA, while my iTunes is frozen, if I go to device manager and uninstall the Apple USB driver that unfreezes my iTunes. Later, as I plug in my ipod Touch again Win VISTA reinstalls the Apple USB driver and then, once again, my iTunes freezes.
From the above behaviour I think it's Apple's USB driver interacting badly with Win VISTA.
Attention: NOTHING on this site may be reproduced in any fashion whatsoever without explicit consent (in writing) of the owner of said material, unless otherwise stated on the page where the content originated. Search engines are free to index and cache our content. Users who post their account names or personal information in their questions have no expectation of privacy beyond that point for anything they disclose. Questions are otherwise considered anonymous to the general public.