I'm having this problem too! It's not just the ratings, either. In MC's iPod view, play counts and the 'last played' indicator are beyond corrupted. I thought this was happening because I dropped my iPod, but yeah, I am using the new update, even though I don't think the Apple website says there wasn't anything new for the 60 GB iPod photo.
First of all, on top of a complete wipe of all ratings (this is based on a completely unplayed recently re-imported library of 2,153 mp3 files and docking after playing the first song in a playlist), a bunch of play counts turn from 0 to 40, 60, 80 or 100. Second, the 'last played' field is a negative number which starts at about 30,283 hours in the future.
Synchronizing doesn't seem to erase the ratings on my hard drive files, but it doesn't reflect accurate 'last played' times and therefore synchronizing after playing songs is pointless and only serves to muck up my new play counts and last played fields, which are pretty much what my smartlists rely on to rotate the songs properly. Also, when copying a song to my hard drive manually and viewing the tag with MC, the rating still exists, so the problem seems entirely with the iPod database files.
My computer still runs Windows98 and it's old so XP is out of the question until I get myself another computer, which is far, far in the future. I have to go to CompUSA to do a complete restore with one of the display models. So far, the CompUSAicans don't bother me after I tell them "I'm just looking" even if my iPod is hooked up. I only have to go there whenever I get a warranty replacement (this would be my third iPod Photo since May) and this problem only cropped up recently when I had to use the newer software.
Is this anywhere near a solution? I'm using 10.0.173 and I don't need MC11's new features and I don't think I should have to pay $25 more to be able to use the old features I already bought. That's reasonable, isn't it? Please?