It didn't use to for me either, then they introduced a new update and it works. You now just have to make sure you let the song completely finish (as in, it will start to play the next song). I'm thinking iPod play count is the only way it can track what you listened to, so it counts the difference between iTunes play count and iPod play count when you sync the iPod to iTunes next time you plug it in (just a guess, though I'm probably in some way wrong about something in some specific method of some idea).