Nano can be used for long drives also however comfortlevel and speed wont be as good as with other cars. It will be best for city usage and trips such as a 200KM or so( it is meant to say it wont be comfortable for overnight long trips of over 300km etc).
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There is no official news as of now from the brand for the diesel avatar of Tata Nano. Neither they have any immediate plans.
Stay tuned for more updates.
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New Tata Nano with EasyShift is available at Rs. 2 lac (Ex-showroom, Delhi), and the final cost depends on the valuation of your car. So, first get the valuation of your car from authorized Tata dealer, so he can give you a final quote for the new car.