Weird but true: For Apple, 2009 has turned out to be the year of inner beauty. Most of the company’s new products, including the iPhone 3GS and the latest MacBooks, are virtually indistinguishable from their predecessors, but which pack meaningful improvements inside. The trend continues with the fifth-generation iPod Nano. For the first time, Apple’s annual reinvention of its most popular music player isn’t about aesthetics–in fact, the new Nano is the same size as the old one and differs visually only its slightly larger screen and slightly smaller clickwheel, the camera on its backside, and the slicker and more vividly colorful (and, I’m hoping, more scratch-resistant) finish on its aluminum case. But the latest Nano carries more new features than any of more outwardly revised predecessors.

In fact, this is the first Nano that feels a little less like a music player and a little more like a Swiss Army Knife. Much of what Apple has added has nothing to do with music: The Nano is now a video camera, a stand-alone voice recorder, and a pedometer. And the major new music feature–an FM radio–is so retro that I’d long ago assumed that Apple would never add one to one of its products. Like most Swiss Army Knives, the new Nano doesn’t match every single-purpose product in every respect, but the improvements add up to a fun upgrade that retains a logical place in the iPod family even in the era of the much fancier and more versatile iPod Touch.

Here’s what the new Nano (left) looks like compared to the one it replaces: That the 2.2″ screen is noticeably taller, and the click wheel is just a skosh smaller, and closer to the bottom of the case.

And here’s the flipside, with the camera and mike on the lower left-hand edge:

That video camera is unquestionably the most significant addition to the Nano, since it makes what was formerly a tiny music player into a tiny camcorder, and therefore opens up the possibility of it replacing low-cost video cameras such as the Flip and its competitors. After I attended Apple’s event on Wednesday, I said that some folks would now think of the Nano as a video camera that does music, rather than a music player that can shoot video. Having used it, though, I’ve concluded that it remains a music player that offers video capture as a bonus feature.

Apple cleverly uses the accelerometer to let you shoot video with the Nano in any orientation you want–any edge of the Nano can be “up,” including both landscape and both portrait orientations. (It may be my imagination, but the player seems to notice you’ve, er, flipped it to a new orientation more quickly and accurately than the previous Nano or the iPhone 3GS.) I still had trouble figuring out the best way to hold the player to record video, though–if you hold it as shown in this new commercial, your index finger is dangerously close to the lens and mike. (And if you’re a lefty, you’ll almost certainly cover the camera if you try to hold the Nano by the clickwheel.)

After a bit of practice, I ended up holding the Nano tightly by one of its lower corners-along the edge of the screen if I was using my left hand, and towards the edge of the clickwheel when I used my right hand. Which worked just fine. I also discovered that when I was shooting in bright outside light, I needed to crank up the iPod’s screen brightness beyond the default to see what I was doing.

So how’s the 640-by-480, 30-frames-a-second video and monaural sound? Good enough to have lots of fun with, but not good enough to render even the lowest-end standard definition Flip. Smart reviewers are disagreeing about how the video compares to that of the iPhone 3GS–the New York Times’ David Pogue found it to be “exactly like” that of the iPhone, while Macworld’s Chris Breen says it’s “not as good.” I haven’t attempted a rigorous comparison, but the first videos I’ve shot haven’t looked as crisp as those from my iPhone.

Here’s one of the first Nano videos I took, of a San Francisco street scene (and yes, that’s my finger making a guest appearance at the start):

The new Nano’s tiny speaker is useful for reviewing your videos before you’ve synced them back to your PC and Mac; it can also play back music, the audio portion of movies and TV shows, and voice memos. As you’d expect from a speaker tiny enough to fit in a device this thin, it’s really, really tiny (it reminds me of my Flavoradio).

I was startled to discover that my second favorite new Nano feature is the pedometer. (I’m not sure if Apple is trying to tell America anything, but between this and Nike+ the iPod is developing into a sophisticated weight-loss device.) You can use it in one-off sessions or keep it turned on all the time, set daily goals, and use a tiny calendar to review just how much you’ve walked and how many calories you’ve burned. As someone who totes an iPhone rather than an iPod, this is one Nano feature I’m officially jealous of. (There are third-party pedometer apps for the iPhone, but I want one like the Nano’s that runs in the background so it’s monitoring my meanderings no matter what.)

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