OK. I have the same problem and have dealt with Apple four times in the past 24 hours. I will report what they have said here although I'm afraid I don't have an answer:
First call. "We have a server problem. It will be fixed in 24 hours. A lot of people are having this problem."
Second call ( 24 hours later). "Our problem. Same problem need another 6 hours."
Third and Fourth Call. Ten hours later. Three different reps in varying orders of escalation. We went through all of the normal stuff (log in together, check case, go to info.apple etc. Everything checks out but nothing works. Fairly intelligent exchange results in the following "we are having a lot of problems with accounts right now. A lot of things are changing and we are having problems all over the place with people's accounts. Right now there is nothing that we can do. Wait another 24 hours and see if it fixes itself."
This obviously ***** because my eight year old doesn't get any of it. And the I POD touch just sits there. I have tried logging in from my mac, her dell etc. Doesn't matter. We are in never-never land. Will keep trying.