Can't update apps via App Store, only on PC through iTunes?

Just got a new 4G 32BG Touch to replace my faithful old 2G.  A couple of days ago, it stopped letting me update or purchase apps from the App Store directly from the iPod.  I can through iTunes on my PC.  iPod is 5.0.1, iTunes is 10.5.
I have done a hard reset, I have logged off/on my Apple account, still get message that says "Cannot connect to iTunes Store".  I can surf the web, remote control my PC...so it's connected to my network.  I have also tried it at work, same message.  I can browse the apps, and it asks for my password after hitting "install".   Then the message pops up. 
Any ideas?  Totally lost, because I never had any issues with my old 2G, other than it was starting to show it's age. 

Okay, that was weird....
Online support told me to call Apple Care.  After giving my serial #, heard there was at least a 15 minute wait.  So, I waited...and waited...and waited.   I had tried to download an app last night, and again this morning at home and at work.  Same problem, "cannot connect to iTunes store".  But I was bored, so I tried it again, and it worked!   Just to make sure, I downloaded a second app.  No problem.  Could be the high traffic, could be Apple finally figured out what the problem was.  Or, they could have heard my name and known they did NOT want to talk to me!

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