I would say that the problem with that firing pin was not that it was made from a nail but that it was made by someone who had no idea what he was doing.
Actually, a nail is not a bad replacement for a gun that will be fired only a few times. Of course, the nail is only the base part; it still has to be properly shaped and fitted. The better approach is to make the firing pin out of drill rod. Then you can harden it or not, depending, again, on the expected use.
But using the best quality material is no guarantee against ignorance and stupidity (or an extra hole in the head).