I had this problem too. Not only would it not recognise my iPod but also a 4gb memory stick (Corsair). It would, however, recognise a crappy little 32mb memory stick. (don't you just love the quirkiness of Windows?!?!) :o/
It's exactly as described here:
http://support.microsoft.com/kb/937187/en-us (mentioned earlier in this thread). I didn't resolve it like this though.
What I did was to remove all the USB devices in Windows Device Manager and reboot Vista. Strangely enough it didn't work last night but when booting the machine this morning I noticed that Vista installed all the USB Root hubs (internal not external - 3 internal USB 2.0 ports)) and then the Universal Host Controllers. I plugged in my iPod (and the memory stick just to check) and all's working fine now.
Weird!
