Users and one iPhone Atlas staffer are reporting problems with the iPod touch while upgrading apps in iTunes 8. See this Apple discussion.
We've discovered this workaround: update the apps from the iPod Touch itself and then sync your iPod Touch with iTunes 8. ITunes 8 transfers the purchases to the iTunes library on your computer and the updates are then available for other devices you might have like an iPhone or other iPods. The error no longer appears.
Since there have been reported problems with on device updates in the past it?s recommended that you closely monitor the device. Keep it from falling asleep and/or running out of power by plugging it into your computer or an AC adapter during the update installations.