iPod failed during update
You'll have to connect your iPod in recovery mode. Make sure the iPod is disconnected and turned OFF, so not on stand by, but completely off. 

Then, while pressing and holding the Home button, reconnect the USB cable to the device. The device should turn on with the "Connect to iTunes" screen. When this screen appears you can release the Home button; your iPod should now be in recovery mode. 



If not already open, open iTunes. iTunes should then display a warning that it has detected an iPod in recovery mode and will ask you to restore it.