I have three suggestions:
# you can try restoring the iPod through iTunes. If it is a software glitch, this should fix it. Keep in mind that this will erase all of its contents, so make certain that you have everything saved to your computer.
# If the iPod is still under warranty, contact Apple about a warranty replacement. However, if the damage was due to mis-use (a drop as iNexxFear mentioned), even if the warranty has not yet expired, Apple may not honor it.
# If the iPod is no longer under warranty, send it out to an outfit such as
http://www.iresq.com for diagnosis and repair.
Good luck.