Any help with updating my iPod Touch 2G to iOS 4.0?

I have the iPod Touch 2G and am trying to upgrade the operating system from 3.1.3 to 4.0 on my PC. When doing so, it has already downloaded the file (took about 20 minutes), but when it tries to back up my iPod it stalls after a few minutes. The bar just sits there and doesn’t move. I’ve even let it sit over night to see if it was just taking a really long time.

How can I fix this or get around it? Is there a way to skip the back up process?

Heard a lot of other people were experiencing the same problem, but haven’t found a solution yet.