Do you mean by 'proportions' that you'd have to turn it 90 degrees to watch a video? Because I'm betting the exterior proportions are within a quarter inch of the 2G nano:
There's only so many things you can do with two unyielding design constrains (ie: the clickwheel and a widescreen window), so I see this as a logical move back to something that's proven workable and popular. Move the clickwheel a tad south and rotate the 3G screen, and you've pretty much got what's depicted in the spy photo.