Hi, I too have this issue.
My iPod Classic 4TH Generation works fine however.
The only thing I can think of that is different is the new iPod 160GB 7th Gen is Formatted with a MAC.
Was your iPod formatted with a Mac Jospie?
The reset of the iPod (Toggle on/off, hold centre / menu) did not assist.
However,
After reformatting my iPod with my Mac - the pHilips CED780 Recognised my iPod once only. There after, No, it did not recognise again.
I've posted on Facebook Philips Car Audio Australia page - awaiting a response.
I've also emailed a few Philips dealers. Only one has responded.
I have used a CMD310 with the iPod classic successfully, But I 'upgraded' to the CED780 so I can control my iPod Classic.
Sigh.
I'll post a response here once I have news.
An progress in your iPod connection Jospie?