Here's what worked for me.
I uninstalled and re-installed the device driver using Control panel/hardware/device manager.
I find in ironic that after fumbling around with itunes help and tutorials I was able to figure it out intuitively using Windows programs.
Both my ipod and nano had to be repaired this way after 'upgrading' to the latest version of itunes.
That said... the new itunes is better... getting closer to the day that they'll actually let us do what WE want with our data.