iPod touch 64gb - iOS4 broke it

So I decided to update my iPod touch 64gb to iOS4, but I'm having a few technical difficulties. iTunes updated, my library updated, then iOS4 downloaded.

After 2.5 hrs I got to this;
'The ipod touch could not be updated. An unknown error occurred (21)'

Nothing was happening so I restarted my iPod..... now I get this;
'iTunes has detected an iPod in recovery mode. You must restore this iPod before it can be used with iTunes'

I click OK and then Restore;

'Verifying iPod restore with Apple...'
'Preparing iPod for restore...'

and then finally;
'The ipod touch could not be updated. An unknown error occurred (21)'

I can't get my ipod to do anything (except weigh down some paper). It shows the screen that wants to connect to iTunes. So I'm stuck in an endless cycle, and not really too sure what to do....

My ipod doesn't work, legally I can not see any way to roll it back to iOS3. I can not install the backup I made before the update. W-T-F is the point in iTunes backing up my touch every time I sync? The one time I need my backup I can not use it.

I use my ipod A LOT, so this better get fixed SOON!!! I sold my ipod classic to pay for my, now defunct, ipod touch... what a bad idea!!

I expect better quality from Apple. This is rubbish programming from a company who charge over-market-prices.