look at the Sony NW-HD5, its about the size of an ipod mini and had 20gb, toshiba has a 40gb drive 1.8" drive, that would fit nicly,
the problem is that hard drives require more power then flash memory for read/write operations,
what really disapointed me about the touch is that i was expecting an iphone without the GSM module, basicly a music oriented PDA, a newton succesor, the problem is that apple limited the usfullness of installed aplications and the ability to add more aplications to avoid people buying a touch insted of a iphone, which is weird, becuase the lack of a GSM module should make the touch cheaper to manufacture for apple, and the price differance is only 100$,
personaly, i hope this pushes cowon to make the X7 bascily a smaller Q5,
for those who dont know the Q5, its basicly a music oriented Windows pocket pc with bluetooth and wifi, toss in a 20gb or 30gb drive, you have a Q5,
the problem is the high price (around $600) and that its a bit chunky,
theres also the archos 605 wifi, but the battery life, the closed system (they charge for you the web browser, how dirty is that) and the lack of application support also turn you quite off,