I tried updating my iPod Touch to the latest 2.1 firmware this morning, downloaded through iTunes 8. The install process completed without a hitch, but my problems started when iTunes offered to restore the backup it made before upgrading. Once the restore was complete the iPod would restart and hang at the apple logo showing a frozen progress indicator.

After 10 minutes I tried again, but the result was the same. The iPod locks up when restoring the backup, so there must be something in the backup that conflicts with the latest firmware.The upshot of this is that the only way I have found to get the 2.1 firmware working is to setup the iPod as a new device without restoring a backup, and let iTunes sync everything. That’s running at the moment so I will post some screenshots of the new genius feature when it’s done, then decide to stick with 2.1 and wait for a jailbreak, or drop back to a jailbroken 2.0.2.