[iPod nano 5g] not readable by this computer - Initialise, Ignore, Eject

For the last month my iPod nano 5g been working fine with iTunes 9.0.1 and iPod software 1.0.1

However when I synced last night I got the following error messages in roughly the following order and the iPod is now unusable:

- "The disk was not ejected properly. If possible always eject the disk before unplugging it..."
- "The iPod 'Simon Howes...' cannot be synced. The required disk cannot be found."
- "The iPod 'iPod' could not be restored. An unknown error occured (1430)."
- "The iPod 'iPod' could not be restored. An unknown error occured (1418)."
- "iTunes has detected an iPod that appears to be corrupted. You may need to restore..."
- "The disk you inserted was not readable by this computer: Initialise, Ignore, Eject"

I used to be able to sync Smart Playlists but have since deleted these from iTunes (mention this as it was raised in another related thread http://discussions.apple.com/thread.jspa?threadID=2156973&start=0&tstart=0 )

So I'm unable to restore the iPod using the above software set up and it is currently unusable.
The iPod screen shows a tick and the message 'OK to disconnect' but when I plug it in to the Mac and am asked to restore it I get the error messages listed above.
Interestingly I have been successful in restoring the iPod using iTunes 9.0.1.8 and iPod software 1.0.1 on a Windows 7 laptop. But that's no use... my music is on my Mac!

Any ideas? Is this fixable or should I be thinking about returning the product?

Thanks,

Simon