Updated software failed...iPod touch won't work now

I hooked my ipod touch to the computer & through itunes updated to the latest version. The update failed. Left it overnight & update still not done. Checked apple website. Said to restart computer. Now ipod when turned on has the itunes symbol with the usb plug picture. Started itunes & it said update failed you need to restore your ipod. How can I avoid this? It will erase everything on there. What about the apps I paid for?

If you are signed into the same iTunes account that originally purchased them, you can redownload apps at no additional cost.
http://support.apple.com/kb/HT2519
The fist part of the update process is for iTunes to make a backup of your iPod. If that was successful (look at date in iTunes preferences in Devices) then restoring from your backup together with syncing should restore you iPod to like it was when it was backed up.

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