I guess one factor why the 3rd gen nano clones are quite popular is due to their lower price than the iPod nano.
Also, the clones come with more features than the iPod nano.
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About eBay sellers, one of my relatives did buy a 2GB 2nd gen nano clone a few months ago from this eBay seller called "reddoorent". It was not hacked with true 2GB memory, and the MP4 player arrived for him in good condition.
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My current MP4 player: Silver 4GB 3rd gen iPod nano clone 
My former MP3/MP4 players:
1. Super*Talent Vidego28 4GB (rebranded ONDA VX858)
2. Apple iPod nano 8GB black 3rd gen.
3. SanDisk Sansa m240 1GB
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