I own a Zune 80 and my brother owns a iPod nano 1st generation.
1. It is way more durable than an iPod. If you drop you ipod once of twice, it is dead. The Zune is built like a tank, and little to no damage happens to it if it falls. The screen is so much bigger, better, and more durable. It made out of glass, while the iPods are made out of plastic (minus iPod touch), which are scracth magnets to the core. The backs of every iPod are also finger print and scracth magnets. The Zune's have backs that will not scracth under normal use. You would have to be an idiots for it to break (or have a idiot for a friend)
2. Video on the Zune is the best. I watch video on my zune it is pretty good. The color on the Zune is much better than an iPods and the big screen is so easy on the eyes. Photos on my Zune look fantastic on my zune. The only problem is getting it (through converters I get it) or you can use WMC to do the job.
3. The interface on the Zune is much better than the iPods. The zune makes it so easy to get threw folders. Need to go to albums? Just flick to their. Need to scroll down a list? Just fick really fast to get there. unlike the iPod, which makes you go from folder to folder and keep making touch a screen and worsen the video experiance
4. Games on the Zune are going to be sweet. With XNA, you can play games with the pad. It will be great.
5. Podcast support is great here. It has a lot of podcasts, and they are very organized. Only download them
6. Radio. The Zune has one of the best radios in the business, thansk to RBDS. iPods don't even have them.
7. WiFi is great on here. Syncing can now be without cables and I can share songs very easily. And when the games come out, you can do mulitiplayer
And yes, limewire can be used on the Zune. Very easy, and I used it once for it. But it is illegal, so don't do it if you don't need to.
The big Square thing is a button and a "scroll wheel". It is the Zune pad and think of it as a combination of the 4 direction click pad and a laptop pad. That what it is.
You should get the Zune if you want to put alot of stuff on it. Unless you have $500 to spend on a iPod (instead using that money to buy a laptop) than the Zune is a much more of a bargin.