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I think it's that headgear....
Fragment of a discussion from Talk:Teeny Nao
"From what I remember, the name overseas is something like "Nao-chan" But judging from the GREAT translation work...we got the child pronunciation of "-chan" which is, oddly enough, "-tan" "
Funnily enough, when I first saw the name of this item, I thought of Shakugan no Shana-tan which features a tiny Shana sitting on Yuuji's head. From that, I actually wouldn't be surprised if the original item name was also "Nao Tan"