The upgrade appears to have wiped out my Shuffle playlist so I can no longer add podcasts via the 'add to playlist' right-click menu function or sync them.
It turns out the latest iTunes update botches syncing for 2nd generation Shuffles. Lots of people have reported it on the Apple support forums where the only solution seems to be to revert to the previous version, or abandon iTunes altogether and use rebuild_db to load tracks manually.
Rebuild_db wipes out my playback positions whenever I re-run the script so that doesn't help much.
If this is the carrot on a stick to force us to buy the new Shuffle it won't work on me.