perhaps a bit late, but have you tried changing the drive letter that the ipod is assigned thru the device manager? had the very same problem when i first picked up my 60g video .. seems that ipod likes to assign itself to drive c:, even if your system is already using it.
control panel - administrative tools - computer management - disk management
make sure the ipod is connected and seen by the pc first (as mass storage device) .. it should show up on the list somewhere. find it, then right click "change drive letter" and change it to something easy (i chose "I" for mine) .. once changed, close down the control panel, safely remove the mass storage device, then unplug ipod. once you plug the ipod back in again, itunes should see it. (if not, your usb cable could be arsed)
late, but i hope it helps someone..