A couple of things...
First: from the MS website: • Import your music. Zune software can automatically import your existing music, pictures and videos from iTunes and Windows Media® Player in a variety of formats, including your existing playlists and song ratings, as permitted by the online service from which it was purchased. Is it legal to do that, import from iTunes? Also, notice the WMP is registered trademark, but iTunes is not, apparently.
Also, I do think it is ugly, in three colors. The raised relief around the buttons will feel cheap, I think. The contrasting debossed ring of color around the screen and fake scroll wheel looks bizarre, and will look worse when it starts wearing faster than the rest of the device. Plus, there is nothing sleek about it, at least compared to an iPod. It looks like it will be very bulky in the hand. And....BROWN? oy veh... Soviet industrial design is alive and well in redmond...