Late last year, Apple ran a replacement program for their 1st Generation iPod Nano.
Details from their site:
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.
I recently received my replacement. It’s a current 6th generation nano in silver (most likely refurbished) and comes with a 90 day warranty. It was an easy process and the hardest part was waiting. Once you register on the site, Apple will send a postage paid box for you to put your nano in. There is a warning that nothing will be returned so you should only place your nano in the box and nothing else. It’s a sturdy box with thick foam to protect it from any damage during the shipping process. It took approximately 1 month for the empty box to arrive even though the email I received stated that it would’ve arrived in two business days. I was anxious so I did some researching online and found out from some forums that because of the overwhelming response, Apple had run out of boxes and needed to order more. But once I received the box everything worked out smoothly and quickly. I received my replacement about a week after my package arrived at the replacement center.
So make sure to send in your 1st gen nano if you don’t mind losing the click wheel.