Well, I have owned two Zunes and a few iPods. I gave all of the iPods to my sister and her husband when I got my 120 gb Zune with display for around $200 off eBay. I added that Zune to my Zune pass subscription and synced up my cd collection of about 30 gb, subscription songs, few dozen movies I converted using Cucusoft and some TV Shows I pulled from the Tivo. The Zune Pass radio stations are kind of weak and barely update, but any song download while subscribing plus 10 songs a month for keeps is hard to pass on -- even the 'free' music sites cost too much as far as time and effort goes compared to Zune Pass.
The 30 gb Zune never had any problems besides a lockup once; I promptly ordered the afore mentioned 120 gb before figuring out how to hard reset the old Zune. The 120 broke two times and now I have an 80 gb from Microsoft.
We have one guy at work that has a Zune. Everybody laughs at him.
I still have some LPs and cassettes…but only because I won't let them go. I never touch them, unless they're unavailable elsewhere, and I've been to lazy to record them to an mp3 file.
For almost everyone I know, it's all about the iPod. And remember that an iPhone is an iPod.
Pandora is amazing, and personalized music choices in the cloud is the future. I just don't look forward to the time when somebody figures out how to charge us for it.
You didn't ask how we BUY music. I still like having that physical CD, even though I rip it once and put it on a shelf forever. My kids' generation, however, just buys songs on iTunes. I think they'll be sorry.
I bought a Zune (40 gig or 80gig... Who remembers?) for my daughter about four years ago and it still works flawlessly. She loved it then and she loves it now. She uses it in the car or docks it in speakers while using her Droid 2 as a phone. She's crazy about that phone and it's packed with music, but she's constantly messing with the Zune. She says her friends don't care for her having to stop the music to answer the phone or text. Not a problem with the Zune.
My other daughter has been through just about every incarnation of mp3 player out there and recently (finally!!) bought a really nice Zune to replace all the mp3 players she's trashed. I'm hoping this means I won't hear anymore, 'Dad! iTunes isn't acting right. Dad! iTunes says I don't have the rights to play the music it sold me! Dad! I can't get iTunes to play the mp3s on the external drive! Dad! iTunes sucks!!' I know nothing about iTunes (or anything starting with a 'I') and don't plan to start, so I wasn't much help. The Zune's drag-and-drop feature has not caused a single issue. (I did load some music on a friend's Shuffle recently and I can honestly say that the last root canal I had was less painful.)
Though I know that the Zune is going to have its detractors, everyone I know that has one, loves it. Personally, I'd hate to see it go.