...a 16gb iPod for video doesn't seem make a lot of sense on its own...
Why not?
You could fit a handful of movies and a bunch of songs on it.
Battery life would be longer using NAND rather than using a HDD
NAND is faster than accessing data from an HD... as fast as the iPod's little processor will switch the shift register on that thing. No seek times... little or no cache required.
-Clive