The nano update fixes several issues including instability when using the Nike + iPod Sport Kit and a problem that caused Cover Flow art to be distorted after playing a slideshow with TV out. Apple also fixed a problem that caused photos to be distorted when waking the nano from sleep.
Support has been added to the nano for Apple's new earphones and in-ear headphones with remote and mic. A setting has been added to turn off Cover Flow when rotating the nano.
The iPod classic update also added support for Apple's new earphones and in-ear headphones with remote and mic, as well as fixing a bug with saving Genius playlists.
Both updates are available through iTunes when your iPod is plugged in.