Having dealt with this issue twice now, I can safely assuage some fears immediately- no the device is not necessarily beyond hope, there is a means for recovering it.
The procedure is simple-
- Plug the iPod Touch into your computer via the USB cable.
- Start-up iTunes manually.
- Press and hold the ‘HOME’ button on the face of the iPod touch and the ‘Sleep/Wake’ button on the top edge simultaneously for several seconds.
This is a Hard Reset and normally shouldn’t be done. But then, if you can’t get it to do anything anyway, what’s there to lose?
Shortly thereafter you should see the familiar, and comforting, Apple Logo appear on the screen. Then just let everything finish up.
If that doesn’t work, then you might have reason to panic…