4 GB 3rd Gen Nano only holds 450 songs...whats up?

Are your songs in mp3 or aac format? I had the same problem as you, and I found out that mp3 format takes up more space, so I converted all my songs to aac format, and I went from 625 songs to 940.

the only thing i could tell you is to do a restore to your ipod, to clear everything off of it, and then convert all of your songs in your library to aac 128kbps. between 320kbps mp3 format and 128kbps aac format, there really isn't much of a difference. there is a slight difference, and i don't see wasting all that room for such a small improvement in sound quality. one other thing is to make sure you aren't syncing videos, pictures, podcasts, and album artwork. if you've done all of that and you are still having space issues on your ipod, i'd take this discussion beyond the forums and have apple look into it. good luck.

when you plug your ipod into your usb port and itunes opens up, try clicking on your ipod in the left column. it tells you how much space is on your ipod total. mine says it holds 4gb's, but itunes says it's only 3.62gb total. anything less than that, might be a manufacturing issue/defect.