06-13-2009 08:12 AM
How to reset an iPod Nano (Generations 1,2,3, and 4)
Tip: If you are having difficulty resetting your iPod, set it on a flat surface. Make sure the finger pressing the Select button is not touching any part of the click wheel. Also make sure that you are pressing the Menu button toward the outside of the click wheel, and not near the center.
If the above steps did not work, try connecting iPod to a power adapter and plug the power adapter into an electrical outlet, or connect iPod to your computer. Make sure the computer is turned on and isn't set to go to sleep.
This information was gotten from Apple's Knowledge base which can be found here.