We bought our Daughter (5) a newer Nano for Xmas last year, she loves it.
along with it we bought one of those cheap Hannah Montana Docks for it that has a guitar and Mic input, She loves mic. She sings and dances to her hearts content for hours on in.
She Appreciates the Nano, and understands that she must take care of it.
Didn't even have to tell her, and she wanted to get her own case for it.
to this day still looks brand new.
we also bought her some kid friendly headphones, and have put a max volume lock setting on the Ipod nano, so we don't have to worry about her ears.
Go Ipod....Expose your kids to Tech as much as you can. just makes it that much easier for them.
Then again before we had our harmony remotes, she would show her mom how to set the receiver, BluRay and TV up for playing a movie.....
We let her buy 20 songs a month that she marks off on a chart, that she earns them week to week for doing her "duties" Best investment we've made. Teaches her responsibility, and if you want things you value you have to work for them.
The dock has been pretty durable, only thing we really make sure we watch her on is when she try's to seat it in the dock. If she doesn't get it the first time she's really good about asking for help.