iPod Update Failed - Touch is now frozen - Help!

I opened a brand new 8GB iPod Touch today and it seemed to work fine. Then it seemed like apps that I bought and downloaded were not working correctly. Every time I clicked on an app it would go right back to the home screen. So I decided to update the iPod software. iTunes downloaded the update fine and then it went through the installation process on the iPod. At the end it said that the iPod just had to restart and it would be finished. However it never restarted. Now whenever I try to turn it on all I see on the screen of the iPod is an image of the little white USB connector and an arrow pointing to the iTunes logo (CD with a blue note). I have tried holding down the power button and completely turning it off and back on again but that doesn't help. My computer doesn't recognize the iPod so I can't do anything in iTunes. Help! What can I do? How can I get the iPod to finish the update of the iPod software?

Corey