Having listened to 5 decades of rocket launches, I would say that nominal means that it is working within mission parameters. There may be glitches, but it is going to work, i.e. the payload is going into orbit. The engine failure wasnt planned, but there was enough redundancy in the system for it to succeed.

Ah. That explains it. I did not know that meaning of the word, and the explanation I checked at: http://dictionary.reference.com/browse/nominal only showed the meanings that I was familiar with.

Live and learn, I guess. Thanks frabcus!

I'm getting the sense that it's used because "numbers != reality", so it's a subtle reminder that they're basing their call on sensor data, rather than actually having their head inside the engine.

I find that to be a sufficient explanation, though I'm just guessing.