In the sense that the new form factor is much more versatile and that the "back to its root" software design turned it back to what its name implies : Nano.
And the 6th gen most definitely supports pictures, just not video, which frankly is not something I want to do on a nano, ever. The hardware required for it was compromising the form factor.
You're not getting my point, they shouldn't have downgraded to the tiny screen in the first place. Touchscreen is not a welcome feature at the cost of almost all the other features. Just because the device was meant to play music doesn't mean it should do nothing else, the other features that the click-wheel Nano offered were definitely useful. iPhone though a phone does many other things. If Apple releases an iPhone tomorrow with only phone functionality, it CANNOT be upgrade in anyway. The current Nano is not what the Nano was, its just a touchscreen Shuffle which is a steep downgrade.
iPod market is declining because it isn't compelling anymore - Shuffle - No screen and only 2GB storage, Nano - Can't do anything more than music, Classic - Not many need that much of space, Touch - People have iPhones and/or iPads.