I had EXACTLY the same problem on my Zen Touch about a week ago. I tried update the firmware but it failed halfway through and went into recovery mode.
Contact Creative. If you're still in the 12-month warranty period they can replace it for you. Be warned, though, as they like to go around in circles when they give you diagnostic tips. They should eventually authorise a replacement, however.
Just hope you've got your songs backed up somewhere =]