The last time I read its review during a local auto-showin my place, the middle class guys would probably go for a revised version of the good old Maruti-800 car which costs around $5000 approx and has the basic safety features that a car requires (and also A/C and other optionals). But Nano doesn't even have a front bumper.
So as you said it's really just a casket on wheels that people should avoid buying (what's a car without it's basic safety features).
I'm not much into auto, but I guess there's a govt team that reviews cars manufactured in India. So if that team ever reviews such a car, it should presumably fail the safety test (so guess that the Tata guys 'might have' bribed them).