Sure, you could just buy a "carrying solution" for the new square iPod nano, but where's the fun in that? Wired shows you how to turn your old wristwatch into a nanowatch -- just take the old strap off, and use the nano's clip to attach it all together. Of course, it depends on your old watch strap, but even if yours doesn't work quite as well as the one that Wired uses, I'm sure a weekend with some Crazy Glue and a few spare parts would probably do it right.
Brian Chen is exactly right -- Apple should totally get behind this nanowatch thing. Add some apps and a camera to the nano's little square touchscreen, and that'd turn it into the real Dick Tracy product. I think it'll take a while (Apple likely doesn't want to fragment the iOS line too much too quickly), but I think that, as more applications pop up for a small touchscreen device like this, we might eventually see Apple unlock a little more possibility with it.