Quick update - went to the Genius Bar yesterday about this. They suggested a full restore (note you will lose all content on your iPod but if it's all in iTunes and still exists on your laptop you can quickly re-sync it all).
Also as this could not be tested at the Genius Bar on the day Apple have put aside a new iPod for me if the restore does not fix it - the iPod will be held for 7 days apparently.
Note my iPod was still under warranty (34 days left) so all this was provided free of charge.....not so if out of warrantly.
I guess if the problem re-occurs after the 7 day period but before the warranty runs out I can start the process again.
And to run the restore you open iTunes and there should be a restore button in your iPod's Summary page.
HTH,
Nick
Message was edited by: nickc909 for typos