The 4th generation iPod color devices (aka iPod Photo) display album art as well although the screen resolution is lower than the 320x240 of 5th generation iPods. The diminuitive iPod nano also does album art albeit at even lower resolution (but it still looks cool and as you say is nice for visually-oriented people).
The portrait orientation of the Zune allows for much larger album art. How does it look when you're in landscape mode?
Even given the iPod's landscape orientation it still doesn't use all the available screen real estate (notice the bar at top and white borders at top and bottom) which is lame. The display layout on the Zune looks much better. The 5G iPod has the exact same screen resolution as the Zune, but does a lot less with it- really the iPod's UI look has changed little since the B&W lower resolution days and now looks dated I think.
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64 GB iPad 2 WiFi, Apple TV 2, 32 GB iPhone 4
Early 2011 MacBook Pro 13" (dual boot with Windows 7), Early 2009 Mac Mini
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