First and foremost, don’t freak out! This is a common problem for some reason especially with the most recent generation (4th). Follow these steps below:
Step 1) Restart your iPod by holding down the home and the sleep/wake button at the same time until the Apple logo appears.
Step 2) If that does not work, you will have to put your iPod in DFU mode by following the guide here.
Step 3) After putting your iPod in DFU mode, you will actually have to restore it back to factory settings. The instructions for this process can be found here.
Hope this helps you guys!