I personally love my Zune (much more than my ipod). I mainly use it for watching movies at work (were extremely slow - real estate market in FL sucks), but ive also got over 15 gigs of music on it as well. The quality of the video depends on what you are converting from. The software i use takes 20 min for every 30 min video, but i let it run while im at work/asleep so it doesnt bother me. The built in FM tuner is nice for when i get tired of music and just want to listen to the news or something. The wireless sharing is a 'good' feature, it'd be a great one if someone found a way to bypass the 3 listens or 3 days DRM (for those that dont know, songs shared wirelessly can only be listened to 3 times or left on the zune for 3 days before they dissapear).
I'd love to see a instant messenger or some type of wifi games, even wifi pong would be better than nothing. Reading on Zunescene, it seems that the Flash Zune (Draco) has already hit production, the Zune 2 (Scorpio) hit a snag in production, but is looking to start soon. I'm doubting it, but I hope MS still plans on firmware updates with new features for the original once the Scorpio comes out.