Power Cycle the iPod
Hold the Sleep/Wake button (on top) until you see a red slider that says "Slide to Power Off." Drag the slider across the screen to allow the device to power off. Wait 10 seconds, and then press that button again to turn it back on.
Reset the iPod
Press and hold the Sleep/Wake button (on the top) and the Home button (on the front) together for about 10 seconds, until you see an Apple logo. (You may see a red slider prior to the Apple, that's OK, but just ignore it). When you see the Apple you can let go, and wait for it to restart itself.
Reset all iPod Settings
Settings > General > Reset > Reset All Settings
If you still experience the issue, connect the iPod to the computer to ensure you are running the latest software. If you've upgraded to 2.0, the latest firmware version is 2.0.2. If not, you're looking for 1.1.5. As a last resort, you may want to consider restoring the iPod software in iTunes:
http://support.apple.com/kb/HT1414
CG