I was pretty sure BigPockets had a few Nano and 5G's refurbs going for cheap about a week or so ago.
John lewis have the new Nano 8GiB for £109 using the £20 off voucher (TEL168CHG234) :
New Apple iPod Nano, 8GB, Black - John Lewis
You can put audio files straight off the hard drive.
Edit: Bah quick ninja edit and move to the appropriate forum eh
. To be honest I reckon you should be able to pick up a 5G Nano or Video quite cheaply (<100) now since the new iPods are out, and as I said there should be some refurbs knocking around.