nano ipod battery

I have a nano ipod that can't seem to hold its charge. I can charge it fully at night but in the morning its complete flat again. When I use it for the gym I have to put it on charge for at least half an hour before I need it. This way works fine as it plays away for 2 hours no problem, but if i go to use it the following morning its dead again. I do have it switched off and the hold switch on when not in use. I have the ipod for 2 years now. Is it time to replace the battery or can anything else be done?
Also is there any way to tell how full a battery is?

here & here is some info on this.
I was just thinking this myself, I've had my ipod (nano) for 1.5 years and it's charge is draining fast. Let me know if you figure any of this out