If I do a restore, will I loose all my contents, ie music,mail etc?

My iPod touch will not sync, says internal device error, if I do a restore, will I loose all my contents, if not, how do I do a restore?

If you restore from backup then the iPod will be like it is provided that all synced media like apps and music are in the iTunes library of the computer on which you do the restore. The backup that iTunes makes does not inlcude synced media like aps and music. For how to restore see:
iTunes: Backing up, updating, and restoring iOS software

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