Thats it exactly -- depends what you need. GP32 is probably the worlds leading retro device. The Zodiac is one of the best general purpose mobile devices.. a good PDA, good for Palm OS gaming, great for emulators (quality), good or great for mobile video, great for mp3 playing, okay controls etc. Has 2 SD slots so you can carry a pile of storage around, stereo audio, some handy hardware GPU (but not alot).
GP32 is much more limited in nature, like a specialist; its only good for homebrew and emulation pretty much, but it is very good at those things. Zodiac emulation is very good, but the controls being analog means the GP32 is superior interface for it. GP32 emulators vary in quality, but many of them are absolutely superb. (ie: DrMD is probably one of the best Genesis/Megadrive emus on any platform. The Genesis emulation on Palm OS/Zodiac is pretty good, but not as good as DrMD by a long shot. But at the same time, SNES is better on Palm OS/Zodiac.)
GP32 BLU and BLU+ have backlit screens (I've not see them yet myself) that shoudl comapre favourably with the (high res) Zodiac display.
So GP32 is a great great emulation device with good homebrew; bright screen on the BLUs (FLU is a little washed out, I'd seriously advise against the unlit older models). Zodiac is a great Palm OS device.
Tough choicue really, but it depends exactly on what you want. If you just wamnt to retrogame, GP32 is likely your best bet. (If only it took SD instead of SMC..)
If you want mobile video or to keep notes or track calendar or addresses or the like, then Palm OS/Zodiac is far superior.
I can't weigh in either way since I use both. But I'll tell you this.. If I play (say) Raiden or R-Type in my basement on the arcade machine I play better than on my GP32; if I play on the GP32, I do better than on the Zodiac, due to the digital control. (ie: Zodiac has analog so it reports in any direction and how far presse din that direction, so emus have to figure out where you're meaning to press, rather than justy getting a simple 8-way response like arcade/gp32).
So arcade > gp32 > zodiac > pda-generic
But depends what you're looking for in the device now and in the future.
jeff