My Nano was a gift to my self for passing my qualifying exam. (It's just one of the many things that I've been too delinquant/busy to toss onto LJ... :D) It is much fun. I am currently using the Notes functionality, the Photos functionality, the Calendar functionality, the Games functionality[1]... oh! and the music functionality!

I've also discovered that 2GB is plenty for me, thank-you-very-much. My computer has a larger collection, but I never need the entire thing; I just take a subset, and tweak it occasionally as the mood warrants. :)

As for one software application per function... that's exactly it! I don't like things that try to do too much, and end up doing it all wrong...