I upgraded my Touch 4 before going to sleep last night.
iTunes and the upgrade process hung at the reboot stage. 12 hours later they were still hung, so it's not a question of "just wait for it to work".
I had to force quit iTunes. Then my iPod went into recovery mode.
I had to choose restore to get my iPod back. I chose "restore from backup", but guess what -- that failed, too. I lost everything. Had to resync everything. All folders -- GONE. And when you have 1000 apps in iTunes, that's a hell of a lot of work to do to get things back how they were... I'm in progress now, and it'll probably end up taking me about 6 hours of work, after about three hours of re syncing 64GB.
I'm still not sure about the application data and settings... a bit worried I will lose every game progress and every application setting.