Accordng to iLounge, this year’s iPod nano will have a larger screen than the current generation offers and will be more like a Zune. It will have the same 1.5:1 widescreen aspect ratio that the iPhone and iPod touch enjoys.
Something obviously needs to be done to fit that screen in right? That’s why they are giving it the shape of the older models, which will seem really weird at first glance. It seems like a step backwards, upping the size, but what they are after is usability.