Apple has made available an update for iTunes, bringing it to version 7.0.1 and fixing some bugs. the update weights 25.7MB and is available through the software update utility.
Here is the description provided by Apple:
With iTunes 7 and the new iTunes Store, preview and purchase high-quality hit movies plus new and classic games designed exclusively for the Fifth Generation iPod. Flip through your collection by album cover with Cover Flow, protect your iTunes library by backing up to CDs or DVDs, and much more.
iTunes 7.0.1 addresses stability and performance issues with Cover Flow, CD importing, iPod syncing, and more.

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Yeah, but it doesn't fix the
Yeah, but it doesn't fix the iPod 1.2 firmware update. >:(