Well, after scouring the web, I found out some info, hopefully this will help someone else with the cryptic error -54.
There is (of course) a bug in iTunes 7.3. It gets scared when it comes across a locked file, and stops the sync. This also happens with a corrupt file.
You can either A: downgrade to iTunes 7.2 which does not have this problem, or B: get this little program Locker and make sure all of your files are unlocked.
I went with option B, because I have an iPod touch that needs iTunes 7.3, and so far, I have synced 19 gigs with no hiccups. Before it was getting to 500MB or so. I'm keeping my fingers crossed!