iPod Touch 3G with all the latest update suddenly feezed

iPod Touch 3G with all the updates suddenly freezed up. It has a black background and only a smal circular progress icon spinning around and arround. It cannot be pwoered off. Although after plugging it in iTune does start, it does not recognize the iPod. An error message read iTune cannot connect to this iPjone (not sure why it calls it a phone) because of an unknown error ocurred. (0XE800065).

Any suggestions?

Thanks in advance.