here's the inside of a 2nd gen nano...
http://www.ifixit.com/Guide/99/images_large/26.jpg
the flash memory device is the dark rectangular package toward the top-left of the assembly
apple sources equivalent memory from more than one maker, this nano uses one of the samsung K9 family - the K9MCG08UM-PCB0 - characters 4 and 5 of the device code denote size:
8G - 8 gigabits (i.e. 1gb, 2**30 bytes)
AG - 16 gigabits (2gb, 2**31 bytes)
BG - 32 gigabits (4gb, 2**32 bytes)
CG - 64 gigabits (8gb) as seen in the picture
other characters indicate other info, for instance, the "B" in PCB0 indicating that the chip "include bad block" as the decoder, rather enigmatically, states, so good thing it has some spare space
data sheet for some of the K9 devices, including the 32 gigabit/4 gigabyte device for a 4gb nano...
http://www.samsung.com/Products/Semiconductor/NANDFlash/SLCLargeBlock/32Gbit/K9NBG08U5A/ds_k9xxg08uxarev11.pdf
if you aren't familiar with this type of document, the quickest thing would be to look at the functional diagram on page 9
top right you'll see that the pages have 2048 + 62 bytes, for the "8G" coded part there are 524,288 pages (the AG, BG, CG devices simply scale this architecture up, doubling capacity each time)
so ignoring, for now, the extra 64 bytes per page, that's 2048*524288 bytes
that is 2 to the power of 30 bytes
not 10**9 bytes
back to the extra 64*524288 bytes, these are the equivalent of another 2**14 2048 byte pages, so unless the device has a huge number of bad pages, the ipod's memory will be comfortably larger than 2**30 bytes
just keep doubling the numbers for the 2gb, 4gb, and 8gb devices