From Wikipedia:
Duct or fipple flutes can also be used as nose flutes. The ‘bidi’ of Taiwan (‘bi’=nose, ‘di’=flute in Chinese), which the native Taiwanese “Ami” people call ‘di bolo’, have the beak of the whistle inserted into one or two nostrils (if used for a double flute, one tube for each nostril and hand.) The practice of two whistles played with the nose has been observed in India, at religious festivals.
I recieved my first tin whistle as a Christmas Present.
4 Hours later after mastering ‘Old MacDonald’, my childish nature kicked in.
I played the tune a couple times through blowing through the mouthpiece with my left nostril, whilst breathing in with my mouth.
It was much fun.
In this year-old thread, Wanderer mentions that he does use his nose sometimes when playing at a RenFaire:
I’ve been asked (in the middle of a gig, of course!) if I can do any tricks with my instruments. I’ve played the whistle backwards (by turning 180 degrees to have my back to the audience…people get too much of a kick out of this, try it) played the violin by having two voulenteers hold either end of the bow, and me moving the instrument bakc and forreth beneith it whilst fingering, and once I did play my ‘brass acorn’ with my nostril.
I was later comissioned to make an instrument to be played with the nose only, and came up with a set of 2 pipes: one (basically a copper whistle) to be finered, and one to drone (with interchangable tubes to change the note). These had a brass tube that protruded up from the fipple, and could be covered in rubber tube to ‘conform’ to the individual’s nostrils. He was delighted, and I declined his offer to let me give it a try.
*Note for would-be nostril whistlers: do not attempt if you have a cold!
The Hawaiian Islanders had a flute that was specifically to e played with the nostril. Breath from the mouth wasn’t really considered ‘ure’ becuase people did mundane things like eat with it, or sinful things like LIE with it, and of course when sick would vomit with it. Breath from the nose, being used only for the breath of life, was pure adn was considered apropriate for use with the flute…which was for wooing a lover.
Bid on one on eBay and got it for a penny! (As it is souvenier quality it doesn’t play well tho’ I’m gonna see if I can ‘tweak’ the mouth…um, _NOSE_piece a bit to improve it.) When it came I explained to my kids how it was played…they both immediately announced “Ewwwwww!–Can we try?!” 
And never, ever, run with a whistle in your nose!
I can hardly wait for the thread discussing the origin and content of the clogging moisture in nose flutes…mmmmpppffff.
Some would say it is condensation, but it’snot. 
'Course it’snot.
Oh, this is good fun. Very entertaining 
Rahsaan Roland Kirk
Howdy,
Back a while ago, there was a hilarious one man show called “Steven Bank’s Home Entertainment Center” about a musical dreamer with a really low attention span. In one segment, he plays recorder with his nose. It’s six minute into the segment here:
http://www.youtube.com/watch?v=W47pc0D722A
But I really suggest you take in the whole hour program starting here.
http://www.youtube.com/watch?v=62EePXzshX8
Best,
Dave
He played flute and whistle as well - but not at the same time!
Well, where’s the fun and amazement in that? It doesn’t count unless he can play both at the same time!
[/sarcasm]