[cal_gecko]

When I go to my iPod on the new iTunes interface, then click the 'photos' tab...
I have "sync photos from" .. as default, it has "iPhoto" selected.. I try to change that to "Pictures" folder, as soon as I hit "Apply", iTunes shuts down and doesn't save the changes.
Irritating.

[griffman]

Works fine here for me (using a nano). Try the usual - move iTunes' prefs, perhaps try syncing your iPod as another user, and see if it works.
-rob.