I think this is probably the most interesting thing about Apple, and probably almost entirely down to the powerful control exerted by Steve Jobs and his laser-like focus: they drop technologies and features just as fast as they invent them.
If you look at Microsoft, you see a company that is dragging around everything they have ever created, but Apple just throw it overboard as soon as it seems to be weighing them down. It's hard to imagine any other company that would have had the balls to suddenly drop the floppy disc and all of their proprietary interconnect standards. They abandoned their original OS in favour of something completely new, they drop legacy APIs at a moment's notice, features, product lines, everything.
Every time they do this they get a huge number of people bitching about their cluelessness here on /., but they still seem to sell more products and make more money each year. Say what you will about them, they are clearly getting something right, and that thing *must* be understanding their market. So if they drop the camera and other features from the nano, you can be sure they spent a lot of time thinking about it and decided they didn't need it.
Presumably they discovered that the kind of people with a nano probably have some other device, like a camera-phone, and weren't using the camera or the contacts app.