Well I installed it (after iTunes 'recommended' it) and have had no end of problems with it. My iPod now quits in some apps unexpectedly which is a pain. Some apps crash now so I have had to do a factory reset of the iPod.
If it keeps up I will roll the OS back to 3.1.2 as 4.0 doesnt seem to work ok here :s.
Emme:Uh, that sucks :/ I have not yet updated (no urgent reason for it).