IPod touch 8GB screen issue

I posted this in another forum, but I didn't get any replies. So I'll post it here.
Hi guys. I've been trying to fix this problem ever since it occurred (a few weeks after I received my iPod... I've had it for around a year and a half now), but something like this has never happened before.
I just updated my 8GB iPod touch to iOS 4 a few days back (I also updated to iTunes 10). Now, when I'm on my 'Songs' list, and I try to scroll down using the right side's little list thing (A to #), the screen doesn't respond. I'm also having issues with the keyboard--the letter 'P' to the far right of the keyboard won't respond when I casually touch it--I need to put more pressure on it then the other letters. As for the right hand side song list, it only responds to me sometimes, if I'm pressing down really hard. This never happened to me before iOS 4, and it's becoming a huge nuisance.
The side list works if I press down hard with my thumb/any other finger. But I can't just touch only one letter any more--I have to keep an even pressure on the entire list.
This is annoying. Is it also an update? Because that doesn't make any sense... the 'P' button on the keyboard still isn't working properly, though.
I tried a soft reset, then I tried a hard reset and restore. Didn't work.
I read on some other sites that this can be an effect of updates, but I'm not too sure about it. I even took off my protective cover to see if the screen worked/responded better. It doesn't. Plus I don't think I have a warranty for it, and I bought this iPod from Wal-Mart, not an Apple store.
Any help or advice is greatly appreciated.
P.S. If I downgrade my iTunes to 9.2, can I restore my iPod touch's firmware back to 3.1.3? Just wondering. Thanks.

Thanks, you guys, for replying! I was getting scared.
Really? You're kidding... I don't want to replace the screen. DD: I mean, it's happened to me before. I hope it'll go away in the next update because I swear, it was working fine before this. I didn't know my iPod had a hardware issue either. {sigh}
SpyglassSally: "If you've done a restore, and the touch screen is still not responding correctly, I think you need to bring it in to an Apple store or check out Service and Repair Online. The link can tell you your warranty info, regardless of where you purchased it. Your warranty is from Apple.
Hope that answers your question."
I don't know if they warranty still applies. I'm pretty sure it's been a year since I first got it. Thanks, though.
Thanks for giving me this information, though. I appreciate it.
Message was edited by: suzy223

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