Cmo, your friend is correct. Here's a September 2007 quote from noted computer insider, Robert X. Cringely from his website:
This time independent testers are finding the new iPods have lower audio quality than the iPods that preceded them. Perhaps this stems from Apple's switch from PortalPlayer to Samsung as the source of its iPod chipsets.I had a first-generation Nano and could swear it sounded better than my new video Nano.