You should look at the videos in the thread that RocketsNorth's posted a link to. For $15-$25 you can get a cheap HD video camera that will record an hour of video on a microSD card. That's about the price of the motor you'd use to launch it. Even if the rocket crashes, the camera will probably still work (I've seen these units survive chuteless recoveries), and if not, the microSD card will.
The IPOD Nano is a nice unit, but the LCD screen and the controls are weak links. I'd use the $150 Nano for launch video, and to display videos taken by the $20 camera. Much less risky.
Bob