If you use an iPod for games, stick with the iPod. If you're wanting a media player, the ZuneHD is the better experience, IMO. It's the reason I looked into Windows Phone 7 in the first place.
For me, iTunes is clustered and counter-intuitive. Zune software is the cleaner, better software. Add in that the Zune HD UI is (IMO) the best touchscreen UI ever conceived, and of course I'll recommend it. It's also cheaper than iPod Touches, but that's primarily due to a lack of hardware support from here on out. Which is fine for me; I don't see needing an upgrade anytime soon.
I use both my Zune HD and WP7 for music. My WP7 serves as my walk to class, work break, short drive music player with only some of my favorite songs available. My Zune HD, on the other hand, holds 32GB of music and movies, with a dock ready to fill the room at any point. For flights and longer trips, I always have my Zune HD. Always.