if ( ! is_admin() ) {
    // Hook in early to modify the menu
    // This is before the CSS classes are calculated
    add_filter( 'wp_get_nav_menu_items', 'replace_placeholder_nav_menu_item_with_latest_post', 10, 3 );
}

// Wee long function names! :P
function replace_placeholder_nav_menu_item_with_latest_post( $items, $menu, $args ) {
    foreach ( $items as $item ) {

        // Find the placeholder
        if ( '#latestpost' != $item->url )
            continue;

        $latestpost = get_posts( array(
            'numberposts' => 1,
        ) );

        if ( empty( $latestpost ) )
            continue;

        $item->url = get_permalink( $latestpost[0]->ID );
    }

    return $items;
}