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I'm getting exactly the same issue. I have 3rd-gen iPod Touch, recently upgraded to iOS4. The symptoms I'm seeing are precisely the same as yours - really stupidly slow scrolling through categories and if I go too fast it just gets stuck in a loop within the first four or five titles in the list.

Rebooted twice, no joy. Wiped and restored the iPod, no joy.

Wondering if anyone has found a fix for this yet?
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