Like the iPod, if you want to get the best sound quality from the Sony Ericsson Walkman phones, the first thing to do is to switch from the stock earbuds to a better pair of earphones. Pairing my Grado SR60's to the 3.5mm output of my W880i is great for casual listening (or try some other easy-to-drive earphones or IEM's). On complicated passages with cymbals or synthesized electronica, it starts to lose some clarity, but only if you really listen out for it.
I also make sure that my music files are encoded at a decent bitrate (mine are 192kbps VBR, minimum). As for EQ, I'm usually on Normal. The other settings like MegaBass gave a real kick to the bass at first, but started to sound artificial after a couple of songs.
As for comparisons, I think the SQ of the W880i is probably on par with my Zen V Plus. The Zen has more storage capacity and will go louder but I'll start losing whatever I have left of my precious hearing. I don't have an iPod, so can't comment there.
The new Walkman software is really slick and very responsive, displaying thumbnails of the album cover as the music plays. Battery life is also exemplary, with up to about 15 hrs of listening on 1 charge with minimal phone calls/SMSes. The transfer rate via USB from my computer to the phone is turtle-slow though, with a 5mb song taking at least 20-30sec. Not sure if that's just my computer acting up though.
