I have a ipod touch 1st generation, I have ITunes with recent version. I have playlists on my iPod and on my computer. While in iTunes, the screen on the right would say I needed to upgrade to 2.1 for a good while now, I just never did..., it cost again to upgrade, so I waited to see if there were any problems. I upgraded and it said I would lose all my music, that did not sound good! Took the chance on the new upgrade because I knew how to put my music back in from the ITunes Playlists from the lists I made on my computer, I was hoping it was going to work. Once I upgraded, which took almost an hour (downloading and installing), when it was finished, I mean really finished, then I unplugged the iPod from the computer and looked at the iPod to see what I had.....No Music! I plugged in the iPod again. It was syncing again. Still no Music! Then I closed out iTunes, unplugged the ipod. Which I do not know if this worked, this is just what I did. I opened ITunes again, my playlists were still there, this was where all my music was and I plugged my Ipod Touch into the computer and waited for my Ipod to show up on the computer in iTunes and then I dragged my music up to my iPod. Now, it was syncing all the music. I now have my music, but no playlists. I have not figured out where the playlist went though, it is like it disappeared from the menu, I will keep looking. At least I have all the music I bought. I just have to figure out how to find things. It now plays the Applications I had downloaded like "lastfm" (radio station), which would not play on my old version. I feel like I have a new iPod Touch! I am having to play with the iPod Touch to to see where everything is located and I am enjoying the music!