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You say the price is a bit high; what price would be not high?
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The price is high because it's above the MSRP in the US. Since the Zune 120 is no longer a current model, normally you'd expect prices far below MSRP - $130-$180 would be a more reasonable price. You would be overpaying greatly.
The Zune 120 is part of the second hardware generation but it came out with the third "wave" of Zune products, so whether it's 2nd or 3rd generation depends on who you ask.
I'd advise against buying a pre-HD Zune at this point - it's last-gen tech, it's at the end of the line for firmware updates, Microsoft isn't going to do much to support it, and the Zune HD is a far slicker product.