The music player is also being touted as a games machine and by the looks of videos around the net the PSP and DS both need to look over their shoulders at this new competitor.
Heres more details:

Product Features
32 GB capacity for up to 8,000 songs, 48 hours standard definition video, or 10 hours high definition video
3.3-inch OLED screen with 480 x 272 resolution and 16:9 display
HD Radio gives you access to many local stations with crystal-clear digital sound at no extra cost
Watch supported 720p HD movies, TV shows, and videos in high definition
Buy, stream, and update your music, download free games, and surf the web via a Wi-Fi connection
Zune is the premium digital experience that gives you access to the latest in entertainment and technology, allowing you to enjoy, connect, and discover content in a whole new way--the way you like it. Browse, stream, buy, and play all you want, including music, HD video, podcasts, games, and much more. Gain the freedom to enjoy your entertainment; Zune is everywhere you are--on your PC, Zune portable player, and Xbox 360 through Xbox LIVE. Zune brings your content up front, so you're always in control.
Buy 32GB Zune HD
Buy 16GB Zune HD