1) Eject your iPod from iTunes.
2) If it doesn't do anything, Force Quit iTunes (right-click / ctrl-click on the icon in the dock and chose Force Quit or just Quit if that's available) and unplug the iPod.
3) Re-open iTunes without the iPod in, let it load everything up and sit idle for a second. Make sure there are no more updates to be had.
4) The plug your iPod in again and see if it will update.
There were a couple of times I ran into update issues with my iPod, but it's almost always a direct result of a corrupt of missing file trying to be placed onto the iPod. iTunes tries very hard to "make it work" so it takes a very long time and appears to freeze. If it does in fact freeze or never give you an error message, when you try the next time, turn off some of the syncing options (like don't put your movies and photos on). Then do it again, add the movies, and then add the photos, and so on. Eventually you'll probably find the issue.
