Thanks iPhone Atlas
How to fix iPhone Blue Screen Of Death due to iTunes 8
Disconnect your iPhone/iPod touch from the computer
In Vista Programs and Features (Control Panel), Uninstall the Apple Mobile Device Support
Restart your computer
Download the iTunes 7.7 installer
Open the iTunes 7.7 installation exe with Winzip or WinRAR, and reinstall only the AppleMobileDeviceSupport.MSI
Reboot your system
Reconnect your iPhone/iPod touch