Hello.
From what I can tell, it appears that this error has something to do with the way the photos are named. If I sync a small album of recently imported photos with default names (i.e. dsc_1234), I do not have a problem. If I try to sync photos that I have renamed (ones that have spaces or other punctuation), it does not appear to work. Perhaps it has something to do with the way iPhoto makes aliases of the original images when you edit them in any way. Not sure about that.
Note: I am on a mac using the newest version of iTunes and iPhoto 08.
I am guessing this is a simple bug and will be fixed with a future update, as there's no way I am renaming over 4000 photos. I have also read that keywords could have something to do with it, but I do not have any keywords in my library.
EDIT: check out this thread for a little more information:
http://discussions.apple.com/thread.jspa?messageID=5228732
Message was edited by: xrob