Do you have GrowlTunes installed and open? It's in the extras on the Growl disk image. I suggest throwing it in your utilities folder, and then adding it to your login items (system preferences -> accounts -> login items)
Is it starting up on the top bar? did u go into system pref to check if it is there? if it is there did u check if you have it program to respond to itunes?
I'm having this same problem with iTunes and Growl. Does it have to do with iTunes 7 or does it have to do with something else? I'd appreciate any help.