I would do the windows format, then a restore. If you're unable to do that then it's faulty anyway and would need a repair. The fact that it's working now will not always be the case in my experience. Besides, if you can't update your music then it's not really any good is it.
Unless you bought your iPod Photo within the first few days of it being launched it will be less than a year old and within the warranty period. Send it back to Apple.