Let me give you a hypothetical:
I have 50gb of music. Being a musician, i like to carry all of my music with me at once. I have a long flight ahead and stopped by walmart to pick up two movies on blu-ray. I put them in my pc (because apple hasnt figured out blu-ray yet) and rip them to 1280x720 avi files. I would like to play these, in HD, without digging my laptop out of my carry-on. How does you iphone solve this problem? It cant even hold my music collection. This is why the zune hd (if it really is hd after all, nobody really knows) is a good idea.
You can hate it all you want just because it doesnt have an apple on it, but that doesnt make it an inferior product. Im certain that if apple annouced an ipod hd that looked exactly like the zune hd everyone here would be going on and on about how awesome it is.
Dude, where are you flying to that you'd need 50gb of music to pass the time? Romulus? Sha-Ka-Ree?
And why would you rip Blu-Ray discs at that resolution for a pocket sized device? Even VHS looks super crisp on a 2 inch screen.