Apple ID on Ipod Touch 64GB

I've just bought an iPod touch 64GB and I can't login with my apple ID. I get the error "The operation couldn;t be completed. (AKAunthenticationError error -7005.)

When I try to create a new ID, nothing happens. It just says loading on the screen and then returns to the previous screen asking to sign-in or create a new ID.

I have upgraded to the latest firmware and I can use Safari so it seems like there's no problem with the connection.

Anyone know how to fix this?