I used to get this error:
http://saltypickles.com/itunes.jpg
I never did fix the problem... it didn't matter witch USB port I used I would get that error, sometimes after 10 songs, sometimes after 200... I couldn't reformat with it either. When I posted here about it, I was told to try Firewire, unfortunaly I didn't have any Firewire ports. So I fought with it until I got the music on it.. then I left it alone and bought an iMac... not suggesting to buy an iMac, but I am suggesting it could be the USB ports on your computer. Could be there are not fast enuf (such as USB 1) or they may not be powered... are you using a USB port from a hub? or on the front of your computer? Make sure you have it plugged into one on the back.