The database is locked down in the new Nano. You can still sync it though you need iTunes on your PC. Tell MC to ignore the iPod in Options->Handheld when it's plugged in. Then remove it. Create playlists for music you want to send to the iPod, then plug the ipod back in and do File->Export to iTunes and iPhone in MC. When the transfer box comes up, uncheck itunes and check your ipod.
Terrible. I hate Apple for this !!!