iPod

So I had a 1st generation iPod video( the one the size of a classic iPod with only a 2" screen) attached to my new 550 with the USB and the music was fine. But then I noticed the album cover art seemed a bit fuzzy so I decided to swap it out with a nano(not sure which generation but it's a couple years old). For some reason although it's newer than the video iPod it doesn't seem to work in the 550. Anybody know why or if it's worth buying a new nano(will the cover art be better quality?). I guess if anything it will save space in the already small armrest compartment.