IPod could not be restored with error 3200

Hi,
I was trying to update my iPod to IOS5 when I got this error message.
The software downloaded successfully but when the update started error code 3200 happened.
What should I do next?
What would happen to my iPod data?
Please help!

iTunes
The iPod “mysticgeek iPod” could not be restored. An unknown error occurred (3200).
