I can add a +1 to the Zune software being far far better than iTunes.
As far as hardware, I still own the original Zune working fine, never had a problem.
At the time I bought it for a few reasons over an iPod
Lower cost (I think 50 dollars less?) for same size
Better screen
Video playback that is actually watchable unlike on the square iPod screen
Wireless sync (do iPods even have that yet? not sure)
FM radio
Better looking (white looked too girly and black just didn't do it for me, too plain)
Customizable wallpaper or whatever on it
Also, not huge but the Apple ear buds are crap, the ones that came with my Zune are amazing.
The iPod touch was the first iPod to even come close to my Zune imo, and by then there were newer Zunes and the iPod wasn't in the same price bracket.
I can't speak to Zune HD vs iPod touch now, but using both iTunes and the Zune software extensively, the Zune software is far superior. Is iTunes marketplace tracks still only 128 Kbps or did they finally fix that? That was a pretty big one as well, anything below 320 MP3 isn't going on my system.