Several things can affect battery life:
Skipping songs a lot can drain the battery very quickly.
Using the EQ
High bitrate songs (for example, if your iPod is full of 256kpbs MP3s its battery will drain double as fast).
From experiences at work (an applecentre) if you press play and leave your fully charged iPod to go through all its tracks without skipping or touching the unit you can expect at least 14 hours. I have seen nano's play for 16. I would say anything in the range of 8-12 is normal for every day use. This is not a problem with iPods - devices like original walkmans, portable CD players, other brands of MP3 players often give the full rated playback time. I had a Sony Minidisk player that quoted 8 hours playback from its rechargeable battery - I only ever got 2 hours from it. The standard in this industry is under optimum conditions and doesn't allow for a huge amount of user interaction.
As others have indicated the battery meter isn't always accurate. They tend to go down fast to begin with, then the 1/2 or 2/3rds falls more slowly.