Thanks.
Yes I meant an ipod touch. It was still under warranty.
I wasn't intending to withhold information, I was curious to see what resolutions others would post. Since this thread is burning up with responses, I'll share.
After trying everything possible on my end, like I said, I finally went to my nearest (two hours away) Apple store and was fortunate enough to be able to sit down with a GENIUS! He took down my information, looked at my ipod touch and pulled out a key. He than opened a magic drawer into which he placed my touch and retrieved a BRAND NEW ONE. That's right, not refurbished, but BRAND NEW. He said "This is a known software issue after the update and we'll replace it". I was amazed. I had my suspicions about the 3.0 update but could not confirm anything solid. Not through Apple nor any other forum. I told him, "It's not a software issue that's being publicized or addressed by Apple openly." He replied' "No, it's not."
So I guess if you're having problems with your ipod touch and can't resolve them on your own, take it to the Apple Store and maybe you'll come out even in the end.
That's all.