First of all, "overrated" can be and typically is very subjective and whereas even the very definition that people use can differ greatly from one person to the next. So, with that said, what follows is my personal opinion and it is no more or less valid than anyone else's opinions on the subject matter.
Regarding the question: "Is Nirvana an overrated band?" The answer is "ABSO****INGLUTELY!"
The band is held in such high regard by fans and by the likes of music industry "expert figureheads" (which are more like bobbleheads), such as the Rolling Stones of the world (ie: the shitty publication(s), not the epic classic rock band). In my opinion, that high regard is unjustified. They band put out 3 albums before they broke up, if you want to call it a "break up". Most people hadn't even heard of the band or the first album until after the second one was crammed down our throats by MTV and local radio stations.
All too often, especially now - 20 years later, they are referred to by people who don't know better, as the fathers of the grunge movement. Pfttt. Not even close. At their peak, they were maybe the most popular, but they didn't pave any paths in grunge.
A big reason why I consider them to be overrated is very simple - they just weren't that good. Non-sensical lyrics surrounded by riffs and beats that a young teenager could play just didn't impress me. The vocals were rough, the lyrics made me shake my head and the look of lazy, dirty, unwashed 20-somethings turned my head right off the bat. In terms of grunge, I'm not a fan of most of the movement/genre, but there are a couple of bands that were pretty decent. I give Pearl Jam fans grief over Eddie's singing/phrasing/pronunciations of lyrics, but the band itself is quite talented. Stone Temple Pilots were awesome at first. I think their debut album is one of the better debut albums of the past 30 years.
But in terms of who was truly talented in the grunge movement ... Alice in Chains! These guys CRUSHED Nirvana in terms of musical talent (again, "talent" is subjective just like "overrated" is). I first heard Man in the Box back in 1990 and I was blown away. I listen to that song now and it STILL fills me with the same enthusiasm it did back in '90. Everything AIC did during Staley's run (4 albums, unplugged + the EPs) was awesome. If anything, while calling Nirvana "overrated", I'd have to say that Alice in Chains is quite the opposite and is vastly "underrated"... musically and vocally. Jerry's harmonies mixed with Layne's leads are a highlight in rock that very few bands have done in hard rock (regardless of whatever subgenre you choose).
So, Nirvana... overated? yes. Overhyped? yes. Overpraised? Yes. Overpaid? Well, the only one that was overpayed was Kurt. Originally, they split everything 3-ways. From what I understand, Kurt and Krist each gave up half of their own 1/3 split (meaning Kurt was getting 2/3) just to keep him in fresh heroin and content enough to keep the band together. Pretty sad if that is true.
