I know you Mac fan-boys are going to slam me for this, but I think the Zune could challenge the iPod.
What it really has going for it is integration with all its other products, namely the 360 and Windows.
Its Wi-Fi feature is interesting: it might just hook into peoples’ socialness so they could all share music (with DRM, duh). What would really be the killer app for me would be something like Pandora or last.fm for it. The I wouldn’t need my own collection when I’m in a hotspot. I would buy it for that alone.