HELP - No sound and will not play any music or videos

Hi All,
I'm really hoping someone can help me. I have an Apple iPod 2g 16gb.
I am having real problems with the sound not working when I upgrade the firmware. If I update to the new 4.1, the internal speaker stops working completely and that's not all...
If I try to play a song, it basically loads the PLAYING screen (with the two arrows and PLAY button in the middle at the bottom) then appears to immediately stop the song and go back to the track list screen.
Also... whenever I try playing any videos on the youtube app, it keeps saying video cannot be played...
Now, if I downgrade to Firmware version 2.1.1 sounds works, videos work and music plays!
I have tried all the Restore option and Reset all settings solution and nothing seems to work. I have been researching like mad on the Internet and have found a couple of posts with similar problesm so I know it isn't just me but does anyone have any ideas at all because, had I any, I'd have ripped all my hair out by now!!!
iPod Touch 2G 16GB 4.1 Windows XP Pro

If it works fine with the older FW, I would leave it alone. iOS 4.1 has its share of problems. Battery life is one big issue.
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