The iPod Nano that I just bought was supposed to be a 16 GB, but it only shows a capacity for 247 MB. ***!

For having only had this thing opened and out for maybe little over an hour, I've already run into some pretty serious aggravation. According to the numerous error messages I'm getting, there's not enough room on my BRAND NEW IPOD NANO for the 1.89 GB worth of stuff in my iTunes library. According to the Nano settings, the capacity is listed at 247 MB and the available space is 226 MB. I want to know just why so much of my storage space went for whatever other purposes the manufacturers had in mind, since I specifically bought this due to its advertised storage capacity of 16 GB. Is this a glitch and do I need to take it back to have it looked at? I've seen in other discussion threads about how the advertised storage capacity isn't what the user ends up with, but I'd like to know just why there's so much less space on this new Nano when I haven't even been able to load anything onto it yet.
I'm not exactly technically inclined, but this experience with a product that I just blew $150 bucks on is starting to make me consider taking it back for a damned refund.
Please, somebody help me!

First of all, you need to separate out "the advertised capacity/usable capcity" figure from the issue you are experiencing. It's two differnt things
The way that memory is determined and the memory used by your iPod for itself, is probably about 1.5-2Gb, leaving you with about 14GB or a little less. So in effect, the advertised capacity is 16GB, and the usable capcity is 14Gb or slightly less. If you only have 247MB, we need to work out where the problem lies.
If you connect your iPod to your iTunes Library, you will notice the Device appear on the left hand side window. Select the Device (that's your iPod) and look on the Summary pane. At the bottom, is a bar showing how much room there is on your iPod and what amount of memory is being used by the various things on your iPod. For example, the capacity of the iPod, audio, video, photos and "other", free.
What are the figures for each of these items, on your iPod?
Capcity (shown to the left of the bar)
Audio
Video
Photos
Other
Free

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The iPod Nano that I just bought was supposed to be a 16 GB, but it only shows a capacity for 247 MB. ***!

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