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I have a Zune 30gb model and have to say I love it. In my opinion the Zune Marketplace and having to convert videos are the only drawbacks to the unit, and are the only reason it hasn’t competed better against the iPod.
The only time I need a MP3/podcast player is commuting or doing yardwork, so the sound quality is fine for me. I have a few movies on it that I can watch during lunch at work or waiting for my oil to be changed in the car. Considering I use a tape-deck converter in the car (old school method back when CD players first came out and cars only had cassette players), cd-quality or better sound isn’t going to really happen anyways 🙂 The screen works for watching movies, even if there are some compression artifacts, but since I don’t have anything to compare it to that may just be the nature of the beast from conversion.
Bought my wife an 8GB version for Mother’s Day but she hasn’t started using it yet. We need to replace the radio in her car (2000 Honda Accord) since it doesn’t have a tape deck or input. I got the player with a Zune car kit but haven’t been able to find a reliable FM station to tune the transmitter to and keep it working 🙁 She just needs something to play music, podcasts, and audio books. She isn’t interested in video which is good since the screen is so little.