ok try this...
Click on iPod, select a song (stay out of coverflow) as it plays click on the middle of the screen. On the left of the progress bar you'll see two arrows going in a circle. Click it until it's white.
If that don't work, reboot the phone and try again.
Reclean the surface & try again.
Make sure you're running the latest version of software from Apple, 1.01.
If all that fails you can try a restore.
And if all that fails after all that, you probably want to call Apple.