weird. I had some trouble with my 1st gen shuffle just this week. It wanted to get updated firmware, but the update would crap out with an error code 1417 or 1418 or something. So then I'd restore, but it would still have trouble mounting, syncing, etc. and i got more errors.
after some googling, I finally just manually deleted everything in the iPod_Control directory (gotta use terminal).
One last Restore and update and everything works fine.