It's got a proper sf plot with nano-things, it's got scary armies of zombies, it's got a ray gun which disintegrates things in nice neat square holes, it's got the joke about the woman's leg growing back, and they all dance around to Glenn Miller at the end. I fail to see how that's not worth a Hugo nom.
Personally I would nominate it solely on the basis of the "who looks at a screwdriver and thinks that could be more sonic?" routine, but I understand that that is less appealing to the younger generation.