Nano 3G playlists not in alphabetical order

I just got a new Nano 3G. I noticed the iTunes playlist is not all in alphabetical order. Its in 6 or so groups of alphabetical orders of about 3 to 8 playlists. After the 3 to 8 grouping, another grouping of another playlist starts and so on. The iPods I have had including the new classic iPod, its just one playlist from A to Z. I am not including the smart playlist.
Does the Nano have some limitation that the iPod does not have?

Thanks,
Jim Nova