Apple has announced the iPod nano, a full-featured iPod that features an ultra-portable, lightweight design with a color screen, Apple’s Click Wheel and the ability to hold 1,000 songs (128-Kbps AAC encoding) or 25,000 photos.

The iPod nano works with the iTunes Music Store and is initially available in a 4GB model priced at US$249 and a 2GB model priced at US$199, with both models available in white or black designs.

“iPod nano is the biggest revolution since the original iPod,” said Steve Jobs, Apple’s CEO. “iPod nano is a full-featured iPod in an impossibly small size, and it’s going to change the rules for the entire portable music market.”

Apple is introducing the iPod nano with optional accessories including lanyard headphones, which integrate the headphone cables into the lanyard, so users can wear their iPod nano around their neck without dangling headphone cables. For customers looking to personalize their iPod nano with colors, an optional set of iPod nano Tubes in pink, purple, blue, green and clear offers fashionable protection in a sheer casing while enabling full operation of all functions including the Click Wheel. Optional armbands available in gray, pink, blue, red and green allow users to wear their iPod nano as a sports accessory.

iPod nano features the same 30-pin dock connector as the iPod and iPod mini, allowing it to work with the current range of of accessories developed for iPod, including home stereo speakers and iPod car adapters.

As part of the software it includes the Auto-Sync technology that automatically downloads a user’s digital music collection, photos or Podcasts onto iPod nano and keeps it up-to-date whenever iPod nano is plugged into a Mac or Windows computer using USB 2.0. With its high-resolution color screen, iPod nano allows users to display album art while playing music, view photo slideshows or play games in full color. iPod nano features up to 14 hours battery life and completely skip-free playback, as well as new stopwatch, world clock and screen lock applications.