Computer recognizes iPod touch 4G as iPhone and says cannot be used!

It's been recently that I updated my iPod Touch to iOS 5.0.1. It updated without any problems but now As soon as I open iTunes, it just displays a message that this iPhone cannot be used. I have updated all my drivers as directed by Apple Online Support. Someone please help!!!!

As a first step try to Reset your device.
Press and hold both the Sleep/Wake button and the Home button for at least ten seconds, until the Apple logo appears (ignore the Slide to Power Off that shows up first).

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