Can somebody else say "eeyuch"? I'm sure Microsoft's Xbox division could've come up with something better looking than this! Well, this is not to say that no one will buy it. Knowing Microsoft, its software features will probably be good, and since it's Microsoft, even they aren't, someone'll buy it.
(UPDATE: After seeing some more screenshots, I'm quite impressed by the UI on the little gadget and, as always, since it's Microsoft, the Zune's display seems to be a lot more customizable than the iPod's. It's the same Mac OS X-and-Windows comparison. The Zune interface, to me, looks slick (it better be responsive like the iPod's!) and quite reminiscent of Vista.)