ipods are evil, they have bad sound quality, they are poorly built, and are overly priced. you are going to have to send your ipod back to apple to fix it, they might be able to fix the problem at the apple store so you can go there first.
Reset the ipod. This happened to mine and that fixed it. I unplugged it first though as I still had all my stuff in itunes anyway.
Apple suggests locking/unlocking a couple of times and reset it.
Had to do it 4 times on another occasion and it's worked fine since.
I've also had to reset mine a few times. Its easy to do and fixes the problem. Also, if your ipod is connected to your computer but after updating the "Do not disconnect" doesnt go away... you can go to My Computer, right click the ipod, and Eject it.