Don't know whats wrong with it, Its screwed up full, but if someone is standing beside me and talking to me I can clearly hear them even though the volume on the iPod is up full, there was a time when I had that screwed up full with my CX300's you heard no outside noise, I tried changing earphones but no difference, I am using a 3rd Gen Nano only about 2 months old. Any advice?

Have you checked the Level on the Ipod Volume Limit to see if its turned up to full in the settings menu.

Have you turned on volume levelling in iTunes? While this works I found it reduces the volume of all tracks to the same level as your quietest track, therefore all tracks are now quiet.
I found it best to turn the levelling off and individually boost the quiet tracks myself.