It is possible that the headphones jack has become faulty. Make sure your headphones are working by trying them with another device (or trying a different set with your iPod).
You should Reset the iPod, if you have not already
A Reset just restarts the iPod (like rebooting your computer); it is not erased. Also, in case this is a glitch in the volume setting, from the Settings screen on the iPod, select Reset Settings (usually last item on the screen).
If that does not help, you can try doing a Restore on the iPod in iTunes. The Restore button is on the iPod's Summary screen in iTunes. This will erase the iPod, reinstall its software, and set it to default settings. If the cause is corrupted software on the iPod, the Restore should fix it.
If a Restore does not fix this problem, the cause is likely to be related to a hardware fault on the iPod, probably the headphones jack.