ITunes 7 cut my IPod capacity by 50%+ - Help

I have a gen 4, 20GB. I updated to iTunes latest 7 and now iTunes says I have a capacity of 8.35GB. I had to do a restore and it wiped all my songs off and now it won't do an undate says i don't have enough free space, even though I have plently. The iPod still says it has 18.5BG capacity. Anybody know what I should do?

i just got done restoring mine as well, after a grueling 3 days of trying....
and i have the same problem
i have an ipod with click wheel 40 GB....it says capacity is 37 GB but i only have 9.7 GB available, even though i just freshly restored it and wiped it...
any help would be most welcome and appreciated. please

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