More than expected
😉 I believe the new iPod Nano only shoots video; one would have to manually extract a still photo from video, and this is entirely possible, if not as simple as it might be. One way to accomplish this would be open the video (once downloaded to iPhoto), in Quicktime, pause at the desired frame, and take a screenshot of the desktop. Then crop out the photo from this screenshot with something like Preview. Something more eloquent might be to open the video within an movie editing program such as iMovie and extract a single frame. I haven't tried this last, but it may be possible.
Would also like to add that the new iPod Nano (5g version?) has a wonderful camera, particularly given its size. While no substitute for any dedicated video camera, it nevertheless has remarkable resolution and returns a video of practical size when downloaded. Not only that, it is simplicity itself to use, and fully automatic. I was surprised only today in shooting video of some flowers in the garden, thinking it would never focus as close, but more than pleasantly surprised to find the video just as sharp and clear as those of intermediate distance and the horizon. In video alone this is more than the toy I expected, and will serve as a good video camera in need, perhaps even as your first choice for something simple.