I've owned both, and I like the Zune better. Odd, I know, but it has a few things a step up from the iPod. To list a few; FM Radio*, higher quality music/video, OLED Screen, wireless sync. Does not have speakers.
*I've heard rumors that there is a "sleeper" radio in the iPod, meaning Apple has a radio in the iPod Touch 3rd Gen, but hasn't put it to use yet.
The iPod does have a vastly superior battery life and much larger App Store. Has speakers.
Vote and discuss which is better.