The fact that the OP called the Zune HD "inferior" to the iPod touch kinda irks me to some degree. Not trying to rain on a parade here but, it sounds like he/she/it already has his/her/its mind made up going in. For audio and even video playback, I wouldn't dare call the Zune HD inferior, not by a very very wide margin to the iPod touch (even the 3rd generation updated 32GB and 64GB models - the 8GB is just the 2nd gen with a lower price, same old hardware).
- Does the Zune HD play audio? Yes.
- Does it sound good? Yes, and by many reports, better than the iPod touch.
- Does it have very long battery life? Yes.
- Longer than an iPod touch? Supposedly, but from comments by owners, I'd say yes.
- Better quality screen? Definitely.
- A bit washed out in sunlight? Probably due to the nature of OLED, but how many people are watching movies on such a small device in direct sunlight, eh?
- Dock with useful options available? Yes.
- HD output if you actually require it? Hell yes.
- More powerful CPU? Pretty much the same, realistically.
- More powerful GPU? Hell yes.
I could go on but, any device will have pros and cons. But to blatantly just call the Zune HD "inferior" just smacks of ignorance, sorry. There's a ton of material out there, and I'm going to assume that the OP did some based on the fact that he/she/it has waited so long to "upgrade" from the old stuff to something a bit more current. The OP did say he's prioritizing the device for music and video use and not apps (which remains to be seen in force or quantity but I'm sure Microsoft has many surprises yet to come...).
Inferior... I mean really.