Wait, are you saying the iPhone syncs, but the Touch doesn't? Or are you just saying that sarcastically and you're talking about the iPhone not syncing? (Sorry, I be confused 😀 )
This is all really bad, because I may need to get a new PDA-esque device soonish, but if this problem persists, the Touch would actually be worse for me than my fifth-gen iPod, which at least will more or less display my info from Palm Desktop.
EDIT: Have you guys updated to the newest versin of iTunes that just came out over the last day or two? 7.7.1? If not, does that fix anything when you update?