"We're sorry, we are unable to continue with your activation this time"... eh?

I updated my friend's iPod from 4.3.3 to 4.3.5 this morning, first it was telling me "this device isn't eligible for the requested build" so I messed around with the hosts file and managed to update the iPod.
Everything seemed to go well, the iTunes "done" notificacion poped but now I can't get it activated!
Are Apple servers down? I'm stuck with the Connect to iTunes screen in my iPod.
Thanks

Have you looked at any of the other posts with yor same problem?  Some are listed on the right side of this page under the heading: More Like This.

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