Recently sold my D3 and got the 5120 and could not be happier. The nav is worlds better, thats all I can even begin to say. Also, I no longer accidentally hit the eject button instead of "Menu" and have to spend 2 minutes for the Nav disk to reinitialize. And the iPod integration is just plain sick. Makes the D3 look about a decade out of date. The ability to touch any part of the artist list and you are there is great. It's actually a lot faster to navigate the iPod on the kenwood than it is on the actual ipod. Album art is a very nice touch too.
I had the D3 for about 9 months and enjoyed it, but could not pass up on the Kenwood for $674. The iPod video controls are awesome as well, no more having to go into the glove box to change movies. Now I can hop between the music and moves seamlessly.
The Pioneer definitely has a more factory integrated feel to it's interface and is much less complex ( a good thing) while the kenwood is much, much more utilitarian style. If you like a lot of details and options and tinkering, the Kenwood is your game (Set the default languages for DVDs, the reading speed for audiobooks on the iPod, etc. The settings are ENDLESS). The only thing I SORT of miss about the D3 is that actual physical Next/Prev track buttons on the unit itself that the Kenwood lacks. Next/Prev is done on the touchscreen.
As far as screen quality goes. The Kenwood has a much more sensitive ( a good thing) touch screen. No more mashing the bottom left corner to page down on the iPod like my D3 had me doing. Also, visibility in direct sunlight is much better than the D3. As in, when the sun comes through and hits the screen, you can still see it! Also, with the Kenwood, you have control over black level adjustment and is a good bit brighter and more colorful than the D3.
Sound wise, for me, the Kenwood wins mostly due to the EXTREMELY customizable EQ bands for each speaker set and sound fields. Also sounds much clearer at higher volumes and more powerful with my currently stock 07 Jetta sound system.
I will be checking out the XM addon when it comes out and the BT will be here tomorrow. My D3 bluetooth started dropping my phone after every two calls, causing me to restart the unit.
If the XM support is anything like the Sirius on the kenwood (Shown here: http://www.youtube.com/watch?v=SZ21gBbUJjk&feature=user)
then I will be very happy. It will not be nearly as pretty as the XM was on the D3 (Which, I'll admit, sold me on the D3 in the first place along with the McDs icon on the maps, lol), but as long as the listings are quick and I can see who is playing on what stations, I'll be very satisfied.
Overall, both are great units. But if nav and ipod and bluetooth are your main concerns, you can not go wrong with the Kenwood. Bluetooth by Parrot, Nav by Garmin. Hope this helps your decision.