Updated iTunes wrongly insists shuffle needs re-formatting

Hi, I've done a quick search through the forums to try and find if this has been reported before.
My iPod shuffle (2nd gen) has stopped working since I updated iTunes. When plugged in, it gives an error message. It says it needs to be re-formatted and offers to restore it to factory settings. I have one home installation of iTunes, and one at work. My home one has the majority of my music collection, and I haven't updated this iTunes to the latest version. On this iTunes version, the shuffle behaves normally.
I figured that the newer iTunes version wasn't backwards compatible, so I reformatted my iTunes with the newer version. No change. It still says that the shuffle is not formatted properly, even after a reformat done by itself. I then downloaded the iPod reset utility and reset my shuffle with that. It was still unrecognised by iTunes. I tried a complete reinstall of iTunes on my work computer, and then repeated the reformat and the reset again, which made no difference.
This can only be a compatibility problem with the last two released versions of iTunes. Something has changed such that it can no longer format or use my ipod properly. Using the same equipment (dock, iPod) with the older version at home shows there is no technical impediment to my iPod working. Changing USB didn't have any effect. Other USB ports are not in use.
I have tried what guides are available in the support forum such as the 5 "r"'s, but I am now at a loss. Ipod software version is 1.0.4. iTunes is 8.0.1.11 at work (faulty) and still I think iTunes 7 at home (need to check later). I don't want to have to track down and install an old iTunes version, simply because your updates have made my hardware obsolete.
Is this a known issue, and is there any other solution available?

Thanks for the response. I was aware that my shuffle would only sync with a single computer. It is a nuisance, but I could live with it. What the problem seems to be is that now the shuffle will not sync with my work computer at all. I can charge the shuffle fine, but I cannot sync any podcasts or CDs in my work computers library to this shuffle, irrespective of whether it's being used with the home library or not.
Perhaps, because of my habit of occassionally reformatting and syncing to a new library, it has in some way shortened the lifespan of the shuffle? But then why is it only a problem with the new iTunes versions?
I'd really like to get to the bottom of this.

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