If you need the storage, you should be comparing the iPod Classic 120 vs. the Zune 120. If that were the case, I'd say get the Zune, no contest. If you're looking for a true PMP, then you should be comparing the Cowon S9, Samsung P3, Sony X-Series, iPod Touch, and the upcoming Zune HD.
But comparing a 120GB HDD based player to a 32GB flash-based PMP shows me that you haven't quite decided yet what kind of product suits your needs. I mean, it's almost like saying "Guys, should I buy a banana, or a car?"
So decide what kind of product you want (flash-based PMP ,or HDD-based music player), and then ask for input, and we'll all be glad to help you out.