I had the same problem with my 2nd gen nano. After I did a stupid itunes upgrade with my ipod synched, music wouldn't play at all, though the rest of the functions seemed fine and it acted as though it were playing -- but stayed stuck at 0:00.
Perhaps everyone has already tried this, but as a gentler option, rather than throwing your ipod on the floor, turn the ipod off. toggle "hold" back and forth a couple of times. then try holding the menu and select (middle circle) buttons at the same time, until the apple comes up. after that, mine worked fine again. this is called a "reset" apparently (it doesn't erase music or anything). hope it works for you, too!