Myself and one of my Daughters have an ipod shuffle, no problems at all! my youngest Daughter has an ipod touch, probably more in line with the Nano than the shuffle is, no problems there either.
Have you done all the relevant online updates?
I would imagine like all these type of products, there is bound to be some that are faulty.
If you have done all the relevant updates and the product is still freezing, then yes I would agree that you should contact Apple for a replacement, as you said they are not cheap to buy, so its only right that it should function properly.