iTunes is nuts or I am!!!!

[gabagoo]

I have an 8 gig I touch and I uploaded the latest software for it as it had gone crazy and it would jump around from song to song on its own. Now it seems to work fine but I am having this problem.
I cant really remember how Itunes works my ipod selections but when I plug in the i touch I get the icon on the left side showing that it is there and when I click on it I can see all the music I want on it.
When I reloaded the software for the i touch I am pretty sure it deleted everything in it which was fine and made a new list that I wanted on it. When I sync them I should have 1200 songs. Now when I play the itouch in my car I open it and I have ON THE GO 1 and ON THE GO 3 as playlists. I never made the number 3 version and it seems to have made its own playlist as I know the songs in it are not necessarily those that I wanted. The other playlist has what I wanted but due to having 2 playlists there are only 600 songs.

I plugged it back in and deleted the 2 playlists and crated a new one. Again I see there are 2 playlists again!!!!

What is going on here? Is it the itunes software driving me crazy or what.

ps I used to have an old 20 gig ipod and never had problems like this.