To completely resore:
Hold power button for 3 seconds
Hold power+home for 10 seconds
Release power, hold home for 15 seconds
If you need help with this, search "how to put iPhone into recovery mode" on my friend's site.
Once you've don't this, plug you iPod
back into iTunes, click your iPod's nam on the left, then click restore from back-up and choose the latest back-up date. You iPod will now have all the previous settings and content as before and will hopefully work. If this doesn't work, it must be the iPod itself that has broken.