How old is your puppy? Puppies learn "bite inhibition" from their mom and siblings. If he was taken away from his mother too soon he missed this and other important lessons.
Hitting his nose will only make things worse. Ignoring him when he is acting like that is the best idea. That's what his mother would have done.
Don't try to pick him up to "love and hug" when he is running around. He's just being a normal puppy.
Here's some more information on bite inhibition and how to teach it:
http://www.canismajor.com/dog/bite2.html