I love my ZuneHD. I thought about getting a phone that could do everything, but I have a hard enough time getting my phone charged without listening to hours of music a day. The UI is amazing. There is some sort of Zen like quality to how you swipe and fling the menus. It is actually fun to navigate menus and stuff. Screen looks brilliant, doesn't show up well in direct sunlight, but good enough for me to do what I need. Sound quality is excellent, might want to pick up some better buds when you can though. The ones that come with are decent, but nothing special.
The real kicker for this thing, to me, is the Zune Pass. Unlimited music, and you can get music straight from the Zune if you have a wireless network. I can sit for hours and browse artists bios and see related artists. You can stream the music and then download it straight to the player if you like it. With the Zune Pass you pay $15.00 a month for unlimited music downloads. If your subscription runs out, you lose the rights to the songs. But, they give you 10 song credits a month to get full rights to 10 songs. So if you spend $10 a month on music, this is a steal.
There are not many apps for it as of right now and I don't particularly care for any of the games except Sudoku and AudioSurf. The internet browser is decent. I don't use the radio much because I have a Zune Pass. All in all, I am extremely happy with my purchase. Use it everyday and have not had any problems.