Actually, nchar means that the field will only accept that many characters, so the values MUST be padded, nad the software does not do the padding by itself. On the other hand, nvarchar means that the field can accept UP TO that many characters, the actual space used is determined with the value is stored, and only the actual number of characters to be stored is what is actually used in the table. I almost NEVER use nchar(unless I know, for a fact, that the values passed will ALWAYS be of a fixed length), and ALWAYS use varchar or nvarchar.
AW