I have exactly the same issue since I upgraded to iTunes version 10.6.3 on my Mac Mini. In order to get the newest version of iTunes I would need to upgrade to a new OS version (which we don't want to do right now).
Apple Tec was not able to help. I got the usual answer: uninstall iTunes and re-install! No frigging clue how to uninstall iTunes - I did ask, but only got links sent to me that do not in any way help!
So, if anyone uninstall and reinstalls, let me know what happens (and if you can let me know how I do an uninstall that would be great).
In the meantime i'll be purchasing via my iPad - at least that still works (download just takes a bit longer).
Would be nice if someone from Apple could provide support here. It's not an isolated issue!