Frozen iPod

Help! My iPod worked fine 1-2 times but now, although it works fine when on the dock, once I remove it (the correct way) the clickwheel does not respond to anything I do. When I place it back on the dock it suddenly runs through all the things I did on the clickwheel (scrolls, changes menus, etc) before changing to the Do Not Disconnect screen.

I've done the 5R's, updated all the software (iTunes and iPod), etc. several times.

Has anyone else had this happen? Anyone have any suggestions? This is very frustrating.