Confession: I have a fourth generation colour iPod. The screen is two inches and eye straining at best for even looking at album covers. So, can't imagine using it or the similar twi inch new iPod Nano as a gaming platform. Says Macworld:
A two-inch colour LCD display isn't very big, no matter how you slice it (though it's large enough for Nintendo to make a jeans pocket-sized game system around, its Game Boy Micro). The clarity of the 320-by-240 display is remarkable, and the brightness is also quite good. Still, I can't quite get past the size. It's too small to see a lot of detail in the games. I was already a bit put off by Ms. Pac-Man's tiny dimensions on the larger iPod's display; here it's almost to the point of being ridiculous... Because of the overall tiny dimensions of the new iPod Nano, I found my hand cramping up during long gaming sessions — it was just a tad awkward to have the iPod nano perched in my hand with my thumb on the Click Wheel all the time.
Almost? It is ridiculous.