If resetting and restoring does not work for you then try this quick and dirty fix which worked for me. My 3rd gen 8GB nano iPod was not responding when I press the MENU button. All other buttons work fine including the scroll wheel. In the past I would have to press the MENU button really hard to get it to work and then even that stopped working. Well....here's the trick which worked for me:
'''''While holding your thumb on the MENU button, place your index finger on the back of the iPod directly behind the MENU button. Now, press the MENU button with your thumb while also pressing on the back with your index finger.''''' THIS WORKED FOR ME!!! :) and it saved me some $$$ because I was going to buy a new iPod but I really don't need it since I plug this into my car and navigate through songs via the car's interface anyway! I also read somewhere that you can pry open the bottom of the iPod and insert a thick piece of paper in the back or something similar to allow the "bonding" to take place when you press the button. However, I'm not going to attempt that as this works for me and I rarely use the MENU button but if all your buttons are dead you might want to try that.
Hope this helps someone!