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A new firmware update was released for the Zune HD, version 4.3. Noticeable additions are a wider keyboard in landscape mode and auto-suggest, but the update also adds support for future 3d games and applications.
For comparison’s sake, here’s the old keyboard in landscape mode:

Video of the keyboard in action:
Official post on the Zune.net forums:
“Zune HD firmware update: Today we released the v4.3 firmware update for Zune HD players; this update adds support for upcoming 3d games and applications, as well as an auto-suggest feature for better text input, and other minor improvements. Enjoy!
Pete, Zune Device Product Team, This posting is provided as-is with no warranties, and confers no rights “
UPDATE:
Some more improvements were noted in a discussion at gdgt.com.
Browser:
Keyboard:
Music:
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