I am sure it will sell a lot (especially at the beginning) due to its 'wow' factor. But in terms of practicality and value this definitely a failure.
It's not that it is wrong to have a music player that only play music, but for the cost they are charging, $150-180 for a machine that only play songs nowadays? It's way overpriced.
Bah, the ipod was way overpriced years ago. It's Apple, that's how they are.
And honestly, maybe you don't find it practical but I can tell you it hits exactly the right reasons I want to have a Nano despite already having an iPhone (it hits all the things the ipod touch/iphone really can't do as well that makes it not redundant to have). It's a huge improvement imho (though I'd be yelling bloody murder if there was no way to have physical buttons but you can buy a remote to go with your headphones and for me, I already have headphones I love with a remote cause they work with my current nano and my iphone).
I don't need a video camera or video playing ability, anytime I'd use that I have my iphone on me which will do a far better job than the little video camera they could put on the nano and the little screen even the fifth gen has. I need something small that is light and stays out of the way, even better that I can clip it onto things. With physical buttons for when I don't want to look (Though honestly the iphone is now fine for that with the remote, and hte nano will be fine for that with the remote as well).
They are not marketing the nano for those that want video capability, they have an ipod Touch for that (and why would they want two of their products competing for the same market, it's a very smart business move honestly). THey are marketing for those that need a music player on the go. That doesn't compete with the Touch and in fact can still be useful for those that have a Touch/iPhone.