Apple has determined that, in very rare cases, the battery in the iPod nano (1st generation) may overheat and pose a safety risk. Affected iPod nanos were sold between September 2005 and December 2006.
This issue has been traced to a single battery supplier that produced batteries with a manufacturing defect. While the possibility of an incident is rare, the likelihood increases as the battery ages.
Apple recommends that you stop using your iPod nano (1st gen) and follow the process noted below to order a replacement unit, free of charge.
Note: This battery issue is specific to the iPod nano (1st gen) and does not affect any other iPod.
You may order a replacement unit via the web. Your iPod nano serial number will be checked to verify that it is eligible for this program. You will receive a replacement unit approximately 6 weeks after we receive your current iPod nano (1st gen).
If you have a personalized iPod nano, you will receive a non-personalized replacement. Make sure to use iTunes to back up any data on your current iPod nano before sending it in for a replacement unit.
Identifying an iPod nano (1st gen): It has a black or white plastic front and a silver metal back – later iPod nano models have a metal front and back.
More info and ordering detailshere.