The iPhono 3 is better than the Zen but the Zen is quite remarkable. I think (working from memory :) the Zen sounds better than the iPhono 2.
I would suggest the iPhono 3 for high resolution systems with top of the range surrounding components including table and cartridge as its price certainly does not limit its use to cost comparable components. I once used it with a Koetsu Onyx Platinum to great effect. Also if you need the last degree of cartridge loading adjustability, go with the iPhono 3.
The Zen actually shocked me as to how good it sounded and it was only in close listening side by side that I could hear where the iPhono 3 outperformed the Zen, but make no mistake, the 3 does outperform the Zen. Is your system resolved/refined enough to get the best the 3 can offer? That’s the questions. The Zen is an incredible device for only a buck fifty. I did not try it with the Elite power supply as I only had the 12v and 15v Elite power supply and the Zen requires 5v. I did try it with an iPower X and that is definitely better than the stock supplied power supply.