I would try the following steps:
# press and hold menu and select for 5-10 seconds to reboot the iPod
# when the screen turns black for a reboot, press play and select at the same time and hold it for 5-10 seconds (this should put the iPod into disk mode)
# connect the iPod with the usb cord to the computer (start itunes - it could take a few minutes until itunes recognizes the iPod)
# when the iPod is in disk mode - open your file manager (finder on mac or explorer on windows) and go to the iPod - the option to see hidden folders must be activated, then go to "iPod_control/music" (if you don't have a backup of your files - copy all subfolders to your computers hard drive).
# delete all subfolders on the iPod's hard drive
# eject the iPod in itunes and unplug it from the computer
# reconnect it to the computer and the iPod should now be recognized from itunes, select the device and restore it (this will take a while)
# when itunes is done - only sync small chunks of your music (something like 1 or 2gb are enough), check every time if the iPod works - sometimes the artwork is the problem, sometimes bad encoded mp3's - but many times it's the massive amount of music that gets hammered into the iPod at once
i hope that this would help you to fix the problem