2Nd and 1St gen sound about the same (though I think 1st gen does a tad better on RMAA) tests. However the Nano is an excellent sounding player just make sure to be using 32ohm or higher headphones with it.
i thought the my 1st gen nano sounded quite decent, until compared it side by side to a ipod video,
both headphone out and line out are much better on the ipod video, and well the ipod video isnt known for amazing sound quality.
with a LOD and an amp theres a really big gap between the 2
the video sounds alot more dynamic, and the nano a bit flat somehow?
just my thoughts, i own both and have them side by side. but all this is just my opinion.
I have heard many iPod models, including 3g ipog 20gb, 5.5g video 30gb, nano 2g, nano 3g, mini 2g, and now Classic 160. I listened to the 2g nano the most (recently) and now have the classic. I don't have a problem with any of them. I can tell the difference with the nano and Classic, with Classic being better. I can't tell the difference between a 2g and 3g nano, but didn't spend much time with the 3g.