In terms of audio quality, a Mp3 encoded at a bit rate of 320kbps will sound 1 to 1 with a CD to human ears. That's not to say that the CD doesn't sound better then the 320kbps Mp3 though, because the CD does in fact sound better. It's just that are hearing is not good enough to pick out the superior CD sound. The Zune HD is well known to have better audio quality then the i Pods, due to it's superior audio chipset. So even if the i Pod is using the Aiff lossless format which is the same as Wav for the PC, it is not going to sound as good as the 320kbps Zune HD. But don't for get that the Zune does support a wider range of audio formats then the i Pods. The Zune HD will play back Wma, Wma pro, Wma lossless, AAC/m4a, and Mp3. So the Zune can play songs that were bought on the i Tunes store for example. You would just have to copy the song from i Tunes to a folder on your computer, or Windows Media Player. Now i Pods in turn, cant play Wma files of any kind. A Zune HD will also play back both MP4 video, and WMV video.
i Pods are geared for the average consumer who looks at having a device with unlimited app support. While audiophiles tend to prefer the Zunes.
Windows Media Player by the way, will rip Cd's into Wma lossless by the way. (Which the Zune HD does support.)
Note: i Tunes will convert Wma into AAC that the i Pod will understand, but unfortently it does cause a slight loss in audio fidelity. Audiophiles tend to look down on this process.
Also, there are multiple lossless audio codecs that do exist. The Zune HD can handle Wma lossless, while the i Pod can handle Apple lossless (ALAC) or also known as Apple lossless audio codec. Now all lossless audio codecs are eaqual to each other in terms of sound quality. The only difference is that some lossless codecs support compression, while others don't. Also some are exclusive to either PC or Mac. (But all are 100% true lossless.)
Here is a small list of the most popular lossless audio codecs that do exist.
AIFF, WAV, ALAC, FLAC, and WMA LOSSLESS.