upside down is because, although the ipod's screen can rotate to suit how you hold it, I don't believe the camera knows up from down. The easiest thing is to get into the habit of holding it so that the photos default to 'right side up'. There are photo apps out there that can rotate your photos.
As to the syncing, is your iTunes up to date? Have you checked the cable or swapped out USB ports?
I sync my iPad and iPod to my windows computer without issue, so it does work. It's usually a matter of getting things set up right.