I have a nano 4gig and it's been awesome!
I'm not all familiar with itunes and it's been working fine for me. It's done a few weird stuff -but when I reboot my computer (which isnt' often), it's been good. As far as I know...when it acts weird, it's because I'm doing something stupid with it.
I LOVE itunes for searching for music. I mean, I have a list of music from my younger years - one-hit wonders that I have no clue what the artist is. Itunes has been awesome to search and find those non-popular tunes and get the information I need.
Then - I search online to find it for free (I've never purchased music from the istore).
There's a really great forum specifically for the ipod -it's called ilounge.
http://forums.ipodlounge.com/