2GB 500Songs but only holds 50 songs????

I am having trouble with this new IPOD. I just transfered my music and only music over to the Itunes and it only says i have room for 50 songs...but I have the IPOD Nano 2GB. Its says its used 1.81GB with only my 50 songs. Is there a way to change the format of my music so that it fits the 500 on to my IPOD?? Please Help!