Had the same unfortunate experience. Just press both the on/off switch and the home button for 30 seconds or so, until it reboots and display the default factory picture (mine was an invite to plug the USB connector, it could also be a yellow triangle).
I think this neverending loop is due to the mail program being installed while trying to restore.
More details
here (check at the bottom of the page), or
here.
Good luck! Once you got a hold of the iPod again, iTunes will most probably update it directly to 1.1.2, so you will have to downgrade to 1.1.1 and jailbreak again, check
this link, get the zip file on that page, and follow the instruction it contains.
(meh... just saw the date of this post, am I late?

)