QUOTE(loophole @ Sep 22 2007, 11:12)

QUOTE(fairway @ Sep 22 2007, 08:40)

...that the Ipod nano quality is generally lower than the normal Ipod quality...
This isn't true at all and afaik the classic and the nano use the exact same audio chipset.
I also think they use the same main boards as well along with the same firmware (or very similar). So the iPod classics and iPod nanos have much more in common (including sound quality) than the Apple person is telling you. It sounds like there is a physical problem with the iPod as I have listened to a 3G iPod nano and I have a iPod classic. Both should sound very similar to the 5G/5.5G line of iPods. So something isn't right in their explanation. The only iPod that I have that actually has a decrease in audio quality is the iPod touch but I still can't really notice it too much (or at all whenever I use some decent cans).
You need to be forceful for a replacement. They might try to talk you out of it. Listen to the demo units on the floor using the same headphones. Bring your own headphones though as you don't want to catch other people's earwigs. I think they use 128kbps AAC files on the demo floor so if those sound better, then you definitely know it is a hardware issue with yours. It is not like you are trying to exchange a $400 iPod touch, this is a lower priced nano we are talking about.