Follow the instructions at this site:
http://www.google.com.au/url?sa=t&ct=res&cd=1&url=http%3A%2F%2Fdocs.info.apple.com%2Farticle.html%3Fartnum%3D61705&ei=3Hc4R9PtCKDUpgS_-bDIDA&usg=AFQjCNGGCDHFhhLmcpdssGQvoSk32Or9qw&sig2=TQJXNFFiBCwPYWWydmrxXg
Straight from apple:
How do i reset my ipod
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