Need help with Playlists not updating, and creating "Playlist 1"

I have a playlist on Itunes called "Album Ipod" that I used to use to hold the albums that I like to listen too that I sync to my Iphone, and since I do not have alot of room on my Iphone I have to continually delete albums for new ones. Ever since the new itunes update when I take out any music and try to Sync it, Itunes just creates out of thin air "Album Ipod 1" which has all the old music, and even if I manually delete it, every time I try to sync it will just create that playlist over and over again. I don't know how to fix this problem, and I ran out of room on my Iphone because it won't get rid of all my old music that I want off.