I've owned every single Zune model except for the 32GB zHD (I do have the 16GB zHD).
I can tell you that the HD is simply amazing. Sure the storage capacity is not that great, but the 32 is slightly better than the 30 you currently have. The screen is beautiful, the battery life is spectacular (I've only charged it two or three times since Friday 9/11). The HD also has an EQ (not that I ever use it, but it's there) and the HD Radio is amazing (hopefully your local radio stations broadcast in HD). The menus are fantastic, and everything is fast. The web browser is decent (I've certainly seen worse on my Samsung Instinct).
Now, for the 120, the biggest plus is the storage capacity. I loved my 120 simply for that reason. It can do most of what the HD does only not as good (plus there is no web browser for the older devices). It has really good FM radio (not HD though), you still have wireless marketplace, plus you actually have buttons to press instead of touchscreen menus. You can also get accessories for the 120 really cheap now.
I swore by my 120 and did not believe that I could live without all the storage. I have a 16GB zHD, and I found that it is totally worth it. I can carry around 95% of my essential music, and a few videos, podcasts, pics, etc.
If I were you, I would get the zHD. It makes the Zune experience even better.
PS - as for Wifi, with any of the devices, unless you are within 25 feet from the source, you're going to get really spotty reception. So please keep that in mind.
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2009 Microsoft Zune MVP