The apps of the iPod Touch are a gimmick designed to draw attention away from the TERRIBLE audio quality.
(This is based on actual market research. With the proper input track, there are entire instruments missing on the iPod.)
Mythical. I've done A/B tests with knowledgeable listeners (music production enthusiasts) and randoms (people I know), and there's no significant difference between the iPod Touch, the iPod Classic, an iPod Mini I had lying around from their first release, and the sound device on an Intel Centrino laptop board.
If you care about your music, you go Zune.
If you care about your music in the feeble sad audiophile sense, you don't buy an MP3 player at all, because--GASP--THEY DON'T DO FLAC OMGOMGOMG.
If you understand that reproduction will not be perfect, but can be pretty good, you'll buy whatever happens to be reasonably priced at a given time.
The Zune HD is a decent media player. It lacks applications, and it's being supplanted by Windows Phone 7 (misleading; it may or may not be installed on phone devices), but for purely media playing, it's alright. It's not the second coming like the squeeing fanboy upthread would have you believe, but it is a solid grade B/B+ media player. The problem with it is that it doesn't really excel anywhere. From a technical/product perspective, regardless of what you want, there are better choices that better fulfill that need on the market.
If I'm just playing music, I want more space than Flash provides. The iPod Classic has something like 160GB of space, compared to 32GB for the common big-name Flash players. If I want applications, the iPod Touch is the only real solution, because it wins on
actually having applications. If you only need 8GB or so, are cost-conscious, and don't care about applications, I might look into the Sandisk line - I have an e250 flash player that does nicely and it only ran me about $75, with a microSDHC card to store more music.
In any case, licensing music off of Microsoft's infrastructure is kind of dumb. They only provide WMA, and it's time-bombed to boot. No thank you; I want music to work wherever I take it. Amazon sells only MP3s (my preferred vendor) and iTunes has the option to seamlessly convert.