After reading a couple of articles regarding my problem, it seems like my ipod nano screen is basically dead and it doesn't respond to at all. I tried to connect it to my computer and I saw the icon on my desktop and it also appeared on my itunes as if it is OK. Everything seems normal except for the ipod screen. So I tried to reset through the computer and also manually by holding - and sleep/wake buttons. On my computer, it appeared that the device is being restored to factory settings.
I still want to know if it is just a screen? or it could be some software that needs to be reinstalled by Apple genius? Could this be a defective product from the factory?