Some good comments here! Glad to see we hit most of the points you guys were interested in, though apparently more video support (via MKV) and audio support (FLAC) is a point of contention as well. Video support has dramatically increased since the last update, and the Zune player will transcode any videos that the Zune HD cannot natively play for you (and the proces is sadly slow...why not use the videocard for transcription Microsoft?!), but it works. However, FLAC support is really unnecessary, I think, unless you're looking at a 128GB+ device.
I also spoke with Microsoft concerning apps at GDC, and learned that there are currently no plans to update the Zune HD to the Windows 7 Mobile 4.0 XNA SDK, meaning any applications made for WinMo7 will not be available for the Zune HD, unless developers intentionally make their applications work on both 4.0 and 3.1. They assured us that doing so is a possibility, but that it isn't the direction they're currently heading.