That warning is a general message from the system, not from iTunes. You would get this same message if you connected an external hard drive that has data corruption issues. It's saying to save off whatever data you can (that's important and not already backed up) and then reformat the hard drive using Disk Utility.
This message appears while iTunes is doing the Restore, or when you connect the iPod (before starting the Restore)? If it happened when you connected the iPod, that is just confirming that that iPod's hard drive has data corruption. Doing the Restore should fix the data corruption by erasing the hard drive. It's equivalent to using Disk Utility to reformat (erase) a regular hard drive.
However, if the cause of the data corruption is the iPod's hard drive becoming unreliable, doing a Restore will not fix it. If it had a problem a few weeks ago that required a Restore, and it needs another Restore now, that could be a hardware problem on the iPod. Hopefully, after this Restore, the iPod will function reliably for the long term.