Updating to OS5 & stopped at 50% now wont let restore backup

Please help me. I was trying to update my daughters ipod to the OS5 system and somehow something happened when it was at 50% and now it won't let us restore the backup. It is suggesting that we restore from the factory reset. Will she lose all her songs? I am really new to this and it is making me extremely anxious! Please help!

Thank you,

Kelly