I own a 5th Generation iPod nano (the one with the camera and the ability to play video). I have also tested this hint with a 1st Generation iPod nano. It may apply to other iPod models as well.
Up until the latest model, the iPod nano has had the ability to do a one-way sync from Address Book to its Contacts. At some point, this ability broke, either with OS X Lion, or with a specific version of iTunes. Attempting to sync Address Book to the iPod nano now produces a zero-byte file called iSync.vcf. I have reported this problem to Apple. There have been updates to both Lion and iTunes since I made that report, but syncing Contacts is still broken. Following is one possible solution that uses a four-step (or less) Automator Workflow.
Optional Step 1: Drag "Run Shell Script" into your Workflow window. In the script area, enter:
rm -f "/Volumes/<your iPod's name>/Contacts/*.vcf"
Be careful to use your iPod's EXACT name, e.g., if there is a curly apostrophe in "John Doe’s iPod".
Find [people] where:
[All] of the following are true
[City][is not] xyzzy
[State][is not] xyzzy
This action will find all your Contacts.
Export [individual vCards] to [Contacts]
If you have Optional Step 1 in your workflow, it does not matter whether you select [individual vCards] or [one vCard]. They look the same on your iPod, and each has its own advantages and disadvantages. To complete this Action, choose "Other..." from the destination popup and navigate to the Contacts folder on your iPod.
tell application "Address Book" to quit
Click the Run button to see if your Workflow works. If it does, save it in either ~/Library/iTunes/Scripts/ or ~/Library/Scripts/Applications/iTunes/, and give it a meaningful name such as like "Export Address Book." Run this script each time you want to update the contacts on your iPod nano.
Mac OS X Hints
http://hints.macworld.com/article.php?story=20120325001513813