Well, the problem was discovered to be caused due to an update to a driver known as "GEARAspiWDM.sys." Its used in Windows to help third-party applications(like iTunes) write to CD and DVD drives, but it also has a history of causing trouble in the form of system crashes (read - the Blue Screen of Death).
Well, there's also another driver being identified in crash reports. It is centered around an updated USB controller driver, which appears to be in use when the iPod device is connected. This is due to the fact that the crash happens as the iPod is recognized via USB.
The above crash problems are not the only issue for Apple as of now. Additional testing of the software on Windows computers by security experts indicate that Apple is still installing MobileMe(a crap software) without users' consent. you don't even have a choice with this crap software while installing. However, Apple appears to be giving users an option to uninstall the service through the Windows Control Panel with the new installer.
iTunes users running Vista are instructed to completely uninstall the application and re-download iTunes 8.