Tim,
I had the same problem where the iPod would seem to disconnect before I had the opportunity to restore it. So I performed the following time-sensitive steps:
1-Plug the ipod into the computer using the usb cable
2-Open "My Computer" (observe how the over time the ipod drive comes and goes)
3-When the ipod is visible, right click and select format
(Leave the format window open even when the ipod goes away)
4-Check the enable quick format
5-When the ipod drive is once again visible, click start
(it may fail because the drive goes away, but keep trying)
6-Once the ipod drive has been formated, launch iTunes and restore the firmware
Let me know if this works for you. Remember this was a time sensitive solution for me, so be patient and persistent. It worked for me after appearing and disappearing some 7-10 times.
Marko