You should never do an update before trnsferring any itunes purchases made on your ipod to your computer.
Everything should be on your computer and backed up.
I would keep contacting itunes support:
Backing up is not the issue. The audiobooks are there, and remote access told the Apple customer service supervisor that as well. The issue is they will not sync over to my iTouch. And the bigger issue is that both the Apple supervisor who promised to help and iTunes have failed to respond at all since I sent them my list of purchase order numbers. It's a week now and no one is responding at all so cointinuing to contact iTunes support or apple support is doing nothing.
<Edited by Host>