i still don't get it, sorry.
If Apple has released a new version of FairPlay on the world, and one iPod (the newest of them, in fact) needs to have an upgrade to play the music, how is it that my 3G iPod that has not had an update in over three years can play it? It surely was not updated with a DRM scheme that Apple just released when the last update came out over three years ago.
Maybe I'm being particularly dense, and I am in no way saying you are not getting this message, but I just can't make the logic work for this. I really wish I'd bought some music before I upgraded so I could have seen that.
So I'm doing a little research, and the first (and only on the first page) entry on Google is your post. Nothing else. And unfortunately, anything with both "Apple" and "2.0" in the search is now returning only iPhone hits.
Ah, here we go. I thought so. FairPlay version 2 has been around since at least iTunes 4.6 and a date of May 17, 2004. There is no new version of FairPlay in iTunes 7.7 (at least not version 2), that explains why I can use my 3G iPod. The following links are to threads on forums.
http://forums.appleinsider.com/showthread.php?threadid=42110
Scroll down about half way to the post by "Ganondorf"
http://forums.ilounge.com/showthread.php?t=36385
Stanv2 is the first poster, and the author of the appropriate title.
So, I'm not sure why it is acting like that. It is possible your iPod has become de-authorized. A simple restore could fix that without the upgrade.