Use iTunes on your PC/MAC to set up playlists, then copy to your iPod/nano Pod. If you're like me you will need to fumble around with iTunes quite a bit to get things organized the way you want. Personally, I have found iTunes not to be that intuitive, but some of that I'm sure is my old age.
BTW, if you're using or want to use the iPod app on your iPhone, the Harman Kardon audio system will not recognize the iPod app on your iPhone past iOS 7. Don't upgrade your iPod or nano Pod past iOS 7 either (I think there is not an upgrade for these devices past iOS 7 anyway). Nobody seems to want to get this problem fixed, HD, HK, or Apple. HD's fix for this problem is to buy a new bike with the Infotainment system!
On my 2013 CVO ultra I reverted back to the nano Pod that came with the bike after upgrading my iPhone to iOS 8 because HK no longer recognized the iPod app on my iPhone. This was an issue with me because I liked that my iPhone was charging while cruising. Problem solved though with a Battery Tender-to-USB adapter for charging my iPhone, even with the ignition off. Most HD dealers sell this adapter. TIP, put your smartphone on airplane mode while cruising. You're not using it anyway, it charges faster and there is less electrical interference with the CB and AM/FM radio.