But Apple believes the era of dedicated devices is waning, and the Nano is a good example of how Apple is evolving its market-leading media players into much more.

The iPod nano 5th-gen got video playback two years ago and then added voice recording last year with a microphone or special headset.

Now, with the iPod nano 5th-gen released Wednesday, the slim player sports a video camera, an FM radio, a pedometer and an integrated microphone for voice recording. It’s a remarkable feat considering Apple has left the dimensions of this iPod virtually unchanged.

Let’s take a look at the additions to the iPod nano 5th-gen.

The camera offers standard-definition 640×480 video, although it can’t do still shots. The lens is built into the back corner along with a small microphone. The 16 GB version can hold up to 16 hours of video.

The video generally looked good, on the order of the standard definition Flip camcorder. The sound quality is decent, although I found it easy to get too close to the microphone, which distorted the sound.

The best part about the iPod nano 5th-gen is the effects the camera applies in real time to video recordings. There are 16 effects that let you stretch or distort images or throw the video into thermal, sepia or X-ray view. My favorite was one called Cyborg, offering a view of what the Terminator sees when it stalks victims.

Getting the video up to YouTube isn’t as easy as it is with the Flip, which lets you do easy uploading with its integrated Flipshare software. But with all the cool effects and the ability to take spontaneous video, the Nano should be a major source of YouTube videos, especially from kids.

An iPod radio has been on people’s wish list for years and it’s finally here. Apple has given the long-awaited feature a twist, building in a 15-minute buffer that allows you to pause a radio feed and listen to anything in that period. You can’t save the buffered audio – it just keeps moving along – but it’s a nice feature to back up and hear what you might have missed.

The radio also allows you to tag certain tunes so you can remember them or buy them later through iTunes. Though the Nano has a tiny speaker, you won’t be able to listen to radio over it because you’ll need to plug in the headphones – Apple’s or your own ear buds – which act as an antenna for the radio.

Check AP video coverage on Steve Jobs’ presentation:

iPod nano 5th-gen retails for US $ 149 (8 GB version) and US $ 179 for the bigger 16 GB version.

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