How do I get my iPod out of the recovery mode loop?

While I was updating my iPod Touch 5g (32GB) to the latest iOS 6.1, the USB by mistake got ditached from my mac and the iPod's screen turned to a USB pointing towards the iTunes logo(Recovery Mode). It showed the same thing when I restarted it around 10 times. After connecting it to iTunes it said that "iTunes has detected an iPod in recovery mode. You must restore this iPod before it can be used with iTunes." After pressing OK on this message the screen I get on iTunes is of an iPod with the name "iPod" and not "Akshat's iPod". It says "iPod Recovery Mode" and has a button to restore. On pressing the restore button a message comes up to confirm the restore and the buttons are "cancel" and "Update and Restore". On pressing "Update and Restore" it searches for a latest software for the iPod and tells to download iOS 6.1 and after pressing download it happily take 4-5 hrs and gets dowloaded. Now, during this downloading period, the iPod keeps restarting on itself and the same message "iTunes has detected an iPod in recovery mode. You must restore this iPod before it can be used with iTunes." appears and after pressing OK it doesnt affect anything but this comes up more than 10-15 times. After the software download the status bar says "processing the download" and this continues for as long as we wait(i.e. it only stops when we press OK when the next message of recovery mode appears). The status bar again shows the apple logo. After this I have to again press the button of Restore iPod>Restoe and Update>Download iOS 6.1 and so the same procedure follows. I have done this about 5 times now, each time taking about 6 hours. I still haven't updated or restored my iPod. I can't get it to waork! This description is too long but I would appreciate if you would help me find a solution for this problem.