The former forward has praised the performance the side put in during the 3-0 win over Dinamo Zagreb.
The Gunners headed into Tuesday’s crunch clash with the Croatians needing a win to keep their slim hopes of reaching the last 16 of the Champions League alive.
They did just that, beating their group rivals 3-0 on the evening with a highly impressive performance to set up an all or nothing game with Olympiakos in the last round of fixtures.
Ozil and Sanchez were arguably the stars of the show at the Emirates, with the Chilean bagging two and Ozil the other to help their side to victory.
And Nicholas was full of praise for the display that Wenger’s men put on.
"Tonight was a much improved and a more fluent Arsenal," he told Sky Sports.
"They were good on the eye and Ozil was fantastic. Sanchez looks tired at times but he still scores two goals.”
The former forward has, however, aired his concern about Olivier Giroud, after the Frenchman struggled to make an impact in the game.
The striker has had to accept a lesser role in the side this season, with Theo Walcott having been preferred up front on several occasions.
With the England man out injured, though, Giroud has had a chance to impress and stake his claim for a regular place.
He has failed to do that, though, with another disappointing display against Zagreb, and Nicholas believes his performances have not been of the required standard.
"I'm a bit concerned about Giroud. His form wasn't good again tonight. His movement was lazy,” he added.