I was just looking at these mockups by Miguel Suárez and came to the conclusion/prediction that this could well be a possibility. However, take a look at the click wheel. What happens when the user turns this new Nano on its side to watch a video. My prediction is that the click wheel will be a smoked black (in this case) or a semi-translcent finish. The menu, play/pause, and skip symbols will be tiny OLED screens being the fascia and light up according to which way you are holding the device.
If this is how Apple design the new Nano, they certainly win my vote.