zune 2.0 with a reported widescreen are supposed to come out by the end of the year with larger hdd sizes.. as for the zune 1.0 that i have (30gb), i'm happy with it, its great for what it does.. and they are slowly adding new features to the firmware. next update is rumored to allow wifi downloading of songs from the marketplace anywhere you have wifi access.. which would be pretty cool if you get the $15 a month unlimited subscription plan..
in my experience, the zune doesnt care what kind of mp3s they are, but you cant use it as an external hdd yet.. (not that i really care since i have a 2gb flash drive)..
my only real gripes about the zune 1.0:
1. no clock (alarm or sleep timer)
2. cant wifi sync with a pc or wirelessly download from marketplace
3. i'd like to see better video codec support
4. the Zune software on the computer isnt as plain and simple as iTunes
thats all i can think of at the moment.. everything else about my Zune is pretty slick.. looks good, its fast, wayyy better song navigation than the iPod interface (even without the scroll wheel).. and I like the FM receiver... so i dunno, i'm happy with it, but sure you could be happy with either the Zen or an iPod.. just depends how you want to use it