This is a simple guide to Firmware downgrading with iTunes 8+ without losing Music from the iPod (this is NO warranty, backup your data if it's valuable to you!!!)
First you need the correct firmware file. You need to put the firmware file in a folder, then open iTunes, connect your iPod and go to the status page. Shift-Click on the "Check now" or "Update" button near the "Restore" button. Now select your firmware and wait until it gets downgraded.
The 1.0.4 firmware release for the nano 4g has patched the notes vulnerability. Do not upgrade to it (there are no new features). I would suggest not upgrading any other iPods either as of August 21. If you already upgraded to 1.0.4, use this file for the instructions above.