...and you don't feel as scared to drop it? If you let go of a nano, it swings on the headphones. If you let go of an iTouch, it rips the headphones off you and crashes to the ground.
Now that the Nano has bluetooth (and podcasts - podrunner is still quite good), it'll make an even greater running iPod - though I feel fine with my iPhone in my running short pockets.
Plus isn't this the only iPod with a FM radio? Again key market is folks working out - many gyms have audio broadcast on internal FM channels for their TV sets.