IPod nano supported video format: H.264 VGA video, MP4, M4V, MOV etc.
As for my iPod Nano 16g, i usually use "Daniusoft video converter suite" to convert any video clip, YouTube video, google video, myspace video, DVD Movies etc. to my ipod nano supported video format , And then i can enjoy these video or DVDs on my iPod nano any time and any place ...
Free download link:
http://www.convert-video-dvd.com/video-converter-suite.html#135