Reports have been flowing in that iTunes 8 contains extra packages and specifically, a device driver, that is causing some Windows machines to freeze, lockup and not work properly. My friend just had this happen so I figured I’d post the fix here.
The recommended solution is to first uninstall Apple Mobile Device Support and iTunes, and then download and install the most recent version of iTunes. (Delete any previously downloaded versions.)
Also, try resetting your iPod if it starts acting wacky.
UPDATE: Apple has addressed the issue.