I have a 4 gb white nano. it is less than a week old. The LCD is failing. The colors are blurry. The Apple store told me it was user damage. I spent one hour on the phone with apple care. I am sending it in but am not guaranteed that it will be fixed. I feel it is defective. It was not sat on as apple care said it must have been to have the screen fail.
For the last few years Apple could do no wrong with their IPod range. They are by far the best looking MP3 Players on the market (with the possible exception of the IPod Shuffle which I hate). However in my opinion they were lacking in functionality when compared to other brands which have built in radios, video and audio recording. Personally I own an IRiver H120. The IPods were always saved by being a fashion icon. Apple could do no wrong so long as they maintained the IPod style.
Unfortunately for Apple the new Nano is getting a lot of bad press (they were even mentioned on RTE Radio One this morning). Will this be the start of a public awakening? Hopefully white headphones are no longer enough. If Apple sorted out the problems with the Nano, made sure future IPods have a high level of quality, and stuck a radio in them I'd probably buy one.
Update: Apple have admitted there is a problem with the Nano screens and they will replace the damaged ones. One journalist on tv said the problem occurs in 1 in 1000 Nanos. However they say that the Nanos are no more succeptable to scratches than other Ipods, so I guess no luck for anyone hoping to get a scratched Nano replaced.