What a bunch of total hyper-obsessive morons.
1- Cotton does not scratch hard polycarbonate. Besides which do you really think for one second after 3+ years experience producing iPods, Apple would suddenly use "softer" plastic? Which, contrary to reports from these dingbats, does not get scratched by fingernails.
2- the nano is *small*, which means you are putting it in places where you may not have put previous iPods, or, in places where it now has more movement play due to reduced size. e.g.: your pocket with a single coin or *shudder* a key. The iPod, due to it's size wouldn't move around much in that situation and you'd be a bit luckier. The nano... oh yes that will scratch. (And if you're not happy with it, may I suggest another place you can stick it? Hrmm? ;)
3- things get used in this thing we call reality, they get worn out. It's a fact of life. Look, you too are getting ragged. Deal with it.
4- I have a 3 year old second generation iPod whose screen is hazy from wear. I can still see the information behind it perfectly. You're trying to tell me you put your nano in your shirt pocket a few times and now "seeing album covers and photos is impossible"? Please.
Baka. Get a grip on reality.
Update:
Biiig difference between cracked screens due to faulty manufacturing, and perceived "too much scratches" (which has always been a gripe with anal retentives and their iPods).