"Isn't that the one that's just been recalled as a fire risk? Only a week or so ago?"
Well setting aside that the picture isn't actually an iPod the iPod that was recalled wasn't the version of the Nano that the picture is trying to copy.
The recall was for the first generation Nano, this one:
en.wikipedia.org/wiki/File:KoolgiyBlackNano.JPG
"Thats not an ipod nano, that will not connect to iTunes."
You can use just about any player with iTunes, you have to drag the music out of iTunes to the player though as it won't automatically sync.
The player above even seems to claim to be an MP4 player so it will play music bought from the iTunes store without conversion. That's if the claim is right, and I'm not really sure I'd trust it...