Take the nano this way:
Last iPod Nano had a nice little video cam and Steve wanted it to compete with dedicated video cams like "Flip".
The new iPod Touch does this job now, with 2 cams, definitely good enough for small video clips.
Now Steve thought: Let's make the iPod Nano a pure mp3 player. Most people don't care about converting and syncing videos to the iPod anyway. Especially on such a small screen.
Touchscreen is hip, so let's include it. Of course it's less useful than real buttons (we are speaking about a mere music player, where you need 3 buttons 99% of the time, you don't need the flexibility of a touchscreen) - but people like fancy things.
And because everything needs to get smaller and super-thin, they decided to go for this, admittedly, odd design. (How do you hold this thing in your hand?)
I mean I see some points in having it as a small audio player where you can actually choose your song without skipping a hundred. But as many people said, the iPod Touch is way too close.
Maybe 99$ for 16 GB would be a nice deal, as a sort of "additional" backup music device.
All in all I think they will go back to the previous design next gen, just as they did with the Shuffle today
![Smile :) :)](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)