It’s actually called the iPod nano (note lowercase, as they’ve done with the iPod shuffle and iPod mini).

Interesting that they’ve keyed on the size with this name, as opposed to the function. Logically it would make more sense for the iPod shuffle to be called the nano, as it’s smaller and lighter, but I guess they’re thinking of this as the “nano” version of the iPod and iPod mini. But what are they going to call the next one, if it’s smaller? An iPod pico?