I would be concerned too if part of the touch screen was unresponsive on my iPad nano. I found some steps you can take when you experience an issue like this (you can skip any steps you have already taken like the reset and cleaning the screen):
Touch screen is not accepting input:
- Clean the screen with a microfiber polishing cloth.
- Do not wear gloves while using the touchscreen. Do not use the touchscreen with wet hands or immediately after applying hand lotion. Moisture affects touchscreen behavior in the same manner as it affects a trackpad.
- If you have a protective plastic sheet or film on the touchscreen, try removing it, because it may be preventing the touchscreen from working properly.
- The current application may be unresponsive; try resetting iPod by pressing and holding the Sleep/Wake button and the Volume Down buttons simultaneously for a least eight seconds, until the Apple logo appears.
- Sync with iTunes and restore the iPod.
My issue is still not resolved. What do I do next?
For information on servicing your iPod, go to the iPod Service FAQ.
You can find the full article here (the article title refers to the 6th generation iPod nano, but these steps are relevant for the 7th generation model as well):
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