The video camera in the nano is slightly annoying in that if you hold the device 'naturally' and just tilt your hand 90 degrees to put it in landscape, you'll almost definitely find your hand covering the surprisingly wide-angle lens at least partly. Moving it in from the edge just another centimetre would have been a much better placement in my mind.
That complaint aside, there's nothing to dislike about the nano as a camcorder. The 2.2in screen is large enough to give a decent view of what's being shot, and for previewing recorded footage. What's really cool, however, is the range of preset effects that can be applied to video as recorded, accessed by pressing and holding the centre button.
There are 15 of these, although half of them are a bit naff as they're distortions rather than 'proper' special effects per-se. The good ones, however, are excellent. Take, for example, the Cyborg effect, which tints the view red and places a cross hair in the centre of the screen surrounded by scrolling numbers and similar robot-y details - a style that's decidedly Terminator-esque, in a good way. I'm particularly keen on Film Grain - which does what it says on the tin.
The quality of video produced by the iPod nano isn't going to facilitate shooting the next District 9 scale epic, but it's entirely suited to the likes of YouTube, Vimeo and Facebook. Specifically, the nano has a 640 x 480 pixel resolution and records at 30fps, in h.264 with mono AAC audio. A one-minute clip will take up a little over 20MB of capacity.
The output of a dedicated pocket camcorder is still going to look better, there's no denying that - especially if it's HD, not SD. However, the quality is good enough that if you had been considering buying a small media player and a basic standard definition pocket video camera then you can now strike that second item off your list.