Dang, that is small!
Here is the thing. Why not get a reqular old iPod? Personally, I like the bigger iPod, and now that I can pick one up for less than $200, the iPod Nano isn't too appealing. I don't need a color screen to look at album art or watch video. I can watch video on a PSP pr just wait to get home, and I usually aquire my music through *herm* "other means". That takes up too much space. I just want a regular old iPod. They still fit in my pocket, and hold alot of data.
But maybe the iPod Nano is meant to go head-to-head with the GBA Micro =P