I sure wish I had NOT purchased an iPod Nano 7 three months ago. I've been having the same problem ever since I bought it, and I've narrowed down the cause.
My Nano 7 pauses mid-song EVERY time there is ANY vibration or movement in the earbud jack, regardless of earbud brand. Because I only use it while working out, that means my Nano 7 is WORTHLESS to me.
I tried to get my $140 back from Best Buy today, but they don't care about my problem with Apple's shoddy product; to them, it's Apple's problem, not theirs. Best Buy got their cut of my money, Apple got the rest, I got the shaft.
One would think Apple would spend just a little of all that cash (sitting on their balance sheet) on product testing before rolling out failures like this, wouldn't one? The Apple store is a half hour away; next time I'm in that area will be a month or two from now. I would save myself a lot of time by simply smashing it to little, itty-bitty pieces with my sledge hammer. Might make a fun little YouTube clip, come to think of it.
Bottom line: For all the good my new iPod Nano 7 is doing me, I might as well have flushed seven twenty-dollar bills down the toilet. (It's not the dumbest purchase I've ever made, but it's right up there with with the ski boat I bought, and then never trusted anyone but myself to drive it.)