Update: Google reports they have fixed this problem.
If you're unable to sync due to "could not generate your list of calendars" errors, please remove any subscribed calendars from Google Calendar, including Remember the Milk, even if you're not syncing those calendars.
After several weeks of investigative work by engineers at Google, NuevaSync, Pocket Informant, and Spanning, we've found the root of a problem many users have been experiencing. Calendars to which the user has subscribed in Google Calendar can become unresponsive, causing the Google Calendar API to be unable to work with sync clients from any vendor.
Apparently calendars from Remember the Milk have become relatively unresponsive in the last few weeks, causing many of our users to be unable to sync. Deleting the RTM calendar from the Google Calendar web interface solves the problem immediately.
Much thanks to our counterparts at Google, NuevaSync, and Pocket Informant for helping track down this issue. Please let us know if you have any questions.