Some people commenting onhave accused me of being a Microsoft-hater. That's ironic, given my job. (See my bio below.)
To be perfectly clear, I use a 30GB original Zune as my primary music player, after my fourth-generation iPod died about a year and a month out of warranty.
I think my Zune's onscreen interface is great. I love the way I can create on-the-fly playlists and switch to random shuffle from within any song (not possible on the fourth-generation iPod, fixed in the fifth-generation). And I prefer the way it natively plays all the WMA files on my computer. (I have a big library of vinyl ripped using Microsoft's now-discontinued Digital Media Plus Pack for Windows XP.)
But...the Zune client software is poor compared with iTunes. Zune's software mangles user-entered metadata by trying to auto-update it without permission; it lacks certain playback functions (no EQ or gapless playback); and it seems to have performance problems--this on a Dell XPS G2, not exactly a doorstop.
I'm hoping they fixed these problems with the new Zunes.
Also, I've never found the Wi-Fi sharing useful--not only because I don't know anybody else with a Zune (the "first man with a telephone" problem), but also because of the three days/plays restriction (not Microsoft's fault, but the fault of the content owners.)
I will concede that the 4GB and 8GB Zunes stack up pretty well against the iPod Nanos. They have a built-in Wi-Fi transceiver and FM radio tuner; the Nanos don't. That's worth the extra 99 cents.
My broader point is simply that Microsoft is not keeping up with Apple's pace of innovation.
You can dismiss the touchscreen and Wi-Fi iTunes store as gimmickry, but they're new, they're immediately intuitive, and people are excited--I saw huge crowds in the Apple Store the day after they were announced, and nearly everybody was asking to demo the iPod Touch (which wasn't in the store until a few weeks later).
The point for Microsoft: you can't expect people to choose a newcomer over the leader unless you're clearly better, or clearly cheaper. The new generation of Zune makes it a credible music player, but I don't see anything really superior to what the iPod offers.
Then again, Microsoft's goal is to be No. 2 in this generation, and if you don't want an iPod, the Zune is a good choice. I'm certainly keeping mine, and looking forward to testing it with the new software.
It's just...if I didn't already have one, I'd buy an iPod. I was hoping Zune 2 would be great enough to make me say otherwise.