Help - Itouch 4th gen camera/photos

I have an Ipod touch 4th gen.  All functions were working properly until around a month ago. 
When I take pictures from either side, the photo does save and I can open it in photos.  However, when I open the photo, it is very blurry.  When I press edit, the picture is clear, but I cannot save it this way.  When I press save, it saves back to blurry.  ALSO, after around an hour or so for ANY photo, when I go back into photos each picture is this white icon with a grey rectangle in the middle.  I basically can't take photos with the itouch.
Video camera functions like facetime and skype work perfectly fine.  Both my and the person I'm talking to's video resolution is fine.  Facebook/instagram works fine. 
In ITunes, when you plug your ipod into a computer, there is a bar showing % of storage used by music, apps, other, etc.  Before these glitches, photos took a signifacant portion (It's bar colour is red).  However, now, even if I take say 100 pictures and within the hour they're still visible but blurry, it will not show that I have any storage used by photos on my ipod.
I have scoured the internet for solutions, and before I go into the apple store, I was wondering if anyone had the same problem.... it does seem kind of random. 
Thanks, I appreciate it!
Product: Ipod touch 32GB 4th gen
latest operating system
no previous history of these problems

Try the standard fixes:
- Reset. Nothing is lost
Reset iPod touch: Hold down the On/Off button and the Home button at the same time for at
least ten seconds, until the Apple logo appears.
- Restore from backup
- Restore to factory defaults/new iPod.

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