IPod Nano 6th Gen - Functional but white screen on pressing wake/sleep button

Hi
I have an iPod Nano 6th Gen (out of warranty & applecare) - hasn't been dropped etc & never had any trouble.
This morning I got the white screen after unplugging it from charging.
I have tried hard reboot (power button + vol down). I have put it into disc mode (hard reboot + both volume buttons) and restored it to factory settings from itunes (10.6.3) . I've even put it into diagnostic mode and looked around to see if there were any tests I could do.
Functionally the ipod works ok - plays music, volume changes, and it will shuffle on shaking/ play pause on double pressing the power button.
The problem is when I switch off the screen by pressing the power button once - if I try to switch the screen on again I only get the white screen (although this doesn't affect music playing etc).
The way to get around this is either doing a hard reboot (which is a pain as it removes all my settings) or by switching off the ipod, waiting 5 minutes, then switching it on again (this preserves my settings). If I switch off the ipod and try to switch it back on within 5 mins, it's straight to the white screen.
The only other odd thing I noticed was that the screen was shaky/jolty and graphics not quite lining up etc, but this only lasted 10s and went once I started playing music...
Any ideas as to what is causing this? I'm guessing maybe a hardware problem but it seems strange that there is no white screen on switching on, just from waking.
It was a present from my dad and I'm very fond of it so would like to keep it/fix it if possible!
Thankyou!

Hello bfsf,
Welcome to the Apple Support Communities!
I understand that your iPod nano (6th generation) displays a white screen after waking from sleep. First let my say that you have completed some great isolation and troubleshooting steps on your own. Because the issue is still present after the fantastic troubleshooting you already completed, it may be necessary to have this iPod evaluated for service. If you would like more information on this process, please read over the information in the attached link.
Apple - Support - Service Answer Center
Cheers,
Joe

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