Restored 40 GB ipod only shows 20 GB free space

I recently had to restore my 40 GB ipod. It works fine now, but I notice that even before I had put any music on the wiped pod I had "used" 20 GB of space. I've started putting my music back on the ipod, but it tells me I've used 20 GB more space than I actually have. What is taking up the space here? I ran the updater already. Is there any way to format it and regain my 20 GB? Can I do this without wiping it once again?? Thanks so much for any help.

As a general rule, the actual reported capacity of a hard drive is about 7% less than the advertised capacity.
The discrepancy you are noticing is due to the differences in the way that hard drive manufacturers calculate disk capacity and how it is reported by the operating system.
HD manufacturers use a decimal measurement to calculate disk capacity. They consider a gigabyte (GB) to be 1 billion bytes.
The decimal measurement would be 1000 x 1000 x 1000 which equals 1,000,000,000 bytes. For example, an 80GB hard drive means that the disk has an unformatted capacity of 80 billion bytes. (80,000,000,000 bytes.)
Since computers "speak" binary, not decimal... the operating system calculates a gigbyte (GB) differently.
The binary measurement would be 1024 x 1024 x 1024 which equals 1,073,741,824 bytes.
Using the example above, an 80GB hard drive would be reported by the operating system as 74.5GB.
80,0000,0000,000 / 1,073,741,824 = 74.5GB
1GB iPod = 930MB
2GB iPod = 1.8GB
4GB iPod = 3.7GB
20GB iPod = 18.6GB
30GB iPod = 27.9GB
40GB iPod = 37.2GB
60GB iPod = 55.9GB
Since the iPod operating system and extras also take up some space (very little... not 8GB!), you will be left with slightly less that the above stated capacity for your content.
Apple also explains the above in this article:
How much content will fit on my iPod?

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