Based on the chance that the 5th generation iPod nano focused on the raindrops falling near its lens in the first video comparison with the Flip Ultra, I took both devices to a different location. You can see the two video recordings compared here. I think the Flip Ultra clearly dealt with dynamic lighting changes much better than the iPod nano. There’s no doubt in my mind that the Flip Ultra is a superior video recording device.
However, Cisco (Flip’s current owner) has a problem on its hands. Because, the iPod nano is a lot smaller, a lot more fun to carry around, and records video that is pretty good (though not as good as the Flip Ultra).