same thing happened to me so i searched the boards and found this solution.
step 1: toggle hold switch on and off
step 2: press and hold menu and the center button until the screen gloes blank (mine beeped i dunno if yours is doing this also)
step 3: immediately after you see the blank screen, press and hold play/pause and the center button. i held it for a while...not really sure how long.
at first nothing happened, but then after i had stopped pressing and holding for a few seconds the apple logo popped up and then after maybe a minute my ipod was back to normal. this worked for some other people as well. give it a try.