According to ZDNet, "With the latest version of iTunes, Apple has disabled an add-on program that let people transfer songs off of their iPod. Apple introduced version iTunes 4.7 last week, announcing new features such as support for the iPod Photo and the ability to find and delete duplicate tracks in a music library. But this week, Apple confirmed that version 4.7 does break compatibility with iPodDownload. The iTunes plug-in is designed to enable iPod owners to copy songs from the music player to an iTunes library, a feature that Apple has not supported."
Well... yeah, but there's plenty of other software, some of it free, for getting the songs off the ipod. I use podworks, which costs $8 and couldn't be easier to use. There are also free utilities that I haven't tried that some people swear by, like senuti: http://www.versiontracker.com/dyn/moreinfo/macosx/23390
Or, just enable disk mode for the ipod, and enable hidden files in the Finder. Voila, there's all the music files.
Much ado about nothing I think.
PS: I think this utility was targeted because it runs within iTunes itself as a plugin - that makes Apple play the role of accomplice which was too much for them. I haven't seen any problems about any of the external utilities.