IPod Touch firmware update question

Question

I have a first generation iPod touch. I finally purchased the 3.1.1 firmware update, and it's downloading now. When I made the purchase, a warning flashed, telling me that when I update the iPod, all of the data on it will be lost. It said that if I wished to keep my music etc., I should make sure it's connected to the computer I usually sync it with.
Now, I suspect that it's just going to update the iPod's firmware, then sync it with my current iTunes library. The thing is, only about half of the music that's on this iPod is on this computer's hard drive. I don't wish to lose the other half.
So, does anyone have any experience with this? If iTunes will back up the data on my iPod, and then restore it once it's done updating, that would be fine, but that doesn't seem like the sort of thing that would happen...
Should I just download copytoy and backup all the songs, then restore them after the update? Thanks.

Answer 1

Thanks for the response. I now have a slightly more serious problem, though, which I doubt can be helped, but I figure I may as well ask anyway. Here goes:
I was looking for a program to extract my music off the ipod to make a backup as you suggest. (Back before I had an iPod touch, I used yamipod, but that doesn't have touch / iPhone support.)
One that looked promising was called Sharepod, so I downloaded it, and launched it. It told me that I shouldn't run both iTunes and sharepod simultaneously, so I closed iTunes. Then it told me that it didn't detect any iPod, so I should re-open iTunes with the iPod connected, then restart Sharepod.
When I opened iTunes back up, it told me that it couldn't read the data on the iPod, and that I should do a factory reset to fix the problem. (This of course will erase the data.)
So now I'm pretty much stuck. I can't get iTunes to read my iPod, and as long as it can't, neither can sharepod. The only way I can get iTunes to see the iPod is to wipe the data, which is what I downloaded sharepod to prevent in the first place. In the meantime, the iPod works just fine, I just can't sync/update it until I wipe it, which I would like to avoid. Do you know of any way I could possibly fix this error without losing my data? I've rebooted both the iPod and the computer, and even re-installed iTunes, but no luck.
Any help is much appreciated.