The iPhone 5 isn’t the only mobile device Apple launched this month. Apple is also shipping two new iPods, the iPod nano and iPod touch, which stand virtually unopposed in the MP3 player market. Given the high quality of the latest iPod nano, I’m not surprised.

I got off to a bad start with the iPod nano, which I unfortunately (and snarkily) pilloried in Is The iPod Nano So Ugly Because Apple Agreed Not to Copy Windows Phone? Sure, the round new icons on this device are in fact pretty terrible. But what I didn’t understand at the time was how small the nano was. Once you place one of these diminutive devices in the palm of your hand, it’s suddenly obvious that this is a different kind of device all together.

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It's tiny: The new iPod nano compared to my smart phone

Of course, the iPod nano has always been small: Apple describes this device as the best possible ultra-portable music experience. But this model has changed more than any other iPod through the years, a point that the firm actually highlighted at its September event.

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The first iPod nano, from 2005, sported a color screen and a click wheel, and came in 2 GB and 4 GB variants. The second iPod nano added an 8 GB version and new colors. For the third generation nano, Apple went in a different direction: That device was short and squat in order to accommodate video playback on its tiny screen; the 2 GB option was dropped.

Returning to the drawing board in 2008, Apple shipped an iPod nano 4G with a thin, tall design that harkened back to the first two versions; for this model, video playback required the user to simply hold the device in a landscape orientation. That year, the storage bumped up to 8 GB and 16 GB. A fifth generation iPod nano dispensed with video all together and utilized a stunning and tiny design, with a square screen, an iOS-like UI, and 8 GB and 16 GB options. And then last year’s iPod nano simply soldiered on mostly unchanged, though Apple added the popular Fitness app to the package. (Apple considers the 2012 model to be a continuation of the 6th generation device from 2010.)

And now it’s 2012 and the iPod nano is completely different, again. But one thing has remained constant through the 7 generations of the product: it’s still a beautiful little device. That said, as I’ll discuss in a bit, the new nano is also a bit of an anachronism in this age of constant connectivity. And that may limit its usefulness to the trendy, younger folks who would otherwise gravitate towards this device.

But before we get to that, let’s see what’s new.

Small, light, and beautiful. Apple correctly hails the incredibly small and light iPod nano form factor, which really does have to be seen—and picked up—to be appreciated. Photos just don’t do it. It comes in seven fun colors, including purple, pink, cyan blue, green, yellow, slate and silver. (There’s also an 8th red version if you order from Apple.com.)

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I like the color availability. But because Apple color-matched each device’s wallpaper to the color of the device, you’re stuck with a small selection of one-color wallpapers, which seems a bit limiting. Not a huge deal.

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Multi-touch display. As with the previous generation nano, this new version sports a multi-touch display, which works wonderfully. But at 2.5 inches diagonally, it’s also the biggest display that’s ever graced an iPod nano. It’s not huge by, say, iPod touch standards. Of course. But it is a beautiful little display and, in the music experience at least, it’s got a very nice touch-based user interface as well.

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Simple, button based controls. Multi-touch works great when you’re looking at the device. But most nano buyers pick this product because of its incredibly small form factor, and they want to use it when they’re working out, running, or walking. For these users, the new nano sports the perfect complement of hardware buttons, and does so in a surprisingly small package. On the side of the device is a set of just three buttons. The outer buttons control volume up and down, but the middle one is multi-function: You press it once to toggle play/pause, twice to go forward to the next song, and three times to  go back.

There’s also an iPod touch-like Home button so you can easily get back to the home screen, rather than doing a lot of swipe gestures.

Bluetooth. The new nano is the first to included Bluetooth support, opening this device up to an amazing array of Bluetooth-compatible speakers in homes and cars, as well as headphones. Brilliant.

Lightning connector. I remain unconvinced by Apple’s new Lightning connector—this would have been the right time to simply adopt the micro-USB standard used by all other mobile devices. (And, for whatever its worth, Lightning offers only USB 2.0 speeds.) There’s no power supply, just the cable.

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More than just music. I tend to think of the nano as a pure music player, but of course it does much more than that. It features an FM radio with live pausing functionality, which is excellent. You can sync photos to the device and run slideshows. And there’s a nice video player, though it doesn’t support captioning, probably because it’d be hard to read on the small screen. Apple’s excellent Fitness app is included, too, offering great compatibility with gym equipment and Nike sports products.

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Apple claims that the new nano gets 30 hours of battery life for music playback. After running the thing ragged for days, I believe it: I haven’t been able to kill the battery yet. It features 16 GB of storage only (no other options are available) and comes with a microphone-less version of the Apple EarPod headphones I like so much. The cost is just $149.

OK, so what’s not to like?

Almost nothing, to be fair. The iPod nano is in a class by itself and is a gorgeous little machine. It’s amazingly portable, offers killer battery life, and connects to the richest media ecosystem on earth. There’s just one problem: It doesn’t do so wirelessly, and you must make a PC connection to get content onto the device. That is, you cannot connect to iTunes in the cloud from the device and use this thing without a PC, as you can with an iPod touch, iPhone, or iPad.

This is problematic because Apple’s iTunes application—required for syncing the device to your content—is an abomination. And while I understand that the pretty little nano is not actually an iOS device, maybe it should be. If you could access the iTunes Store and iTunes Match from this device, it would literally be perfect.

As it is, it’s only excellent. Highly recommended … Assuming you can put up with iTunes.

Side note: Given the amazing capabilities of iOS devices like the iPad, it is possibly only a matter of time before Apple lets you sync the iPod nano (and the iPod shuffle) to an iPad instead of a Mac or PC, and sync content from the device, or from the cloud, that way. How amazing would that be?