Hey i just got a 16gb ipod touch and i bought 2.0. when i tried to update it, it told me that there was an error and the ipod could not be restored, i didnt have trouble before i bought 2.0 and im using 7.7 btw
assuming your ipod is stuck with the recovery image of usb connection and iTunes logo then hold the home and sleep buttons down till the ipod turns off and let go of the buttons.
right then with the ipod off follow the following steps:
with the ipod turned off and iTunes loaded
connect ipod to pc/mac
hold the home and sleep and count to 10
at ten let go of the sleep key and with the home button still held down count a further 10 seconds (I found on pc it can take upto 20 seconds)
iTunes will detect a iPod in recovery mode
go ahead and click restore .......... hope this helps