iPod photo: iTunes quits unexpectedly when optimizing photos

Some photos with very unusual dimensions (for example, a photo that is really wide but only a few pixels high) can cause iTunes to quit unexpectedly when you try to sync them to your iPod photo. This occurs during the photo-optimizing phase—when "Optimizing photos for iPod name" is showing in the status section of the iTunes window. This is more common with graphics imported from websites.

First, make sure you have iTunes 4.7.1 or later. If you have an earlier version of iTunes, update to the latest version and try syncing again. If the issue remains, then continue with the steps below.
To check the version of iTunes:
Macintosh: From the iTunes menu, choose About iTunes.
Windows: From the Help menu, choose About iTunes.

If you are aware of any problematic photos within the folder or Library being synced, try removing them and try the sync again. If you're not sure if you have such photos, try syncing smaller subsets of photos until you identify the photo that is causing iTunes to quit.