It would seem the latest iPod nano models have a secret diagnostic screen dubbed “iTerm.” This screen allows users to test various features of the iPod nano, such as: the power, audio, remote, TV Out, LCD, IO, FM receiver, memory, the touch panel and accelerometer. You navigate this screen using the Sleep/Wake and Volume buttons.
There is also a Disk Mode that when activated allows the nano to appear as an external USB disk when connected to a computer. You’ll know you are in Disk Mode when the nano’s screen turns from its usual color to a retro-looking black and white screen reminiscent of earlier-model iPods.