I had a nano 5G for some days from a friend, and tried to patch ml_ipod for it. Finally, I gave up. Some research showed that it's not only the use of the compressed iTunesCDB format as on the iPhone now, they also need some hashed sqlite databases on the device now which was not necessary before. Adding this capability to ml_iPod would be a major project, costing several days of development. We would need to add two external libs (zlib and sqlite) and add a whole bunch of new code to ml_ipod itself.
Personally, I can't do that, simply because of the time it takes.
As a result, we have to admit: No nano 5G support with ml_iPod!
We have to use iTunes for the nano in the future. Too bad.