Well the stock drive is a double-platter one, so I guess its something to do with the maximum size per platter.
Though, now I think of it, a correction - my example is using the logic board from a 120gb model (which is actually a latter model than the fat 160gb). But I did the same thing with a fat 160gb logic board previously and I'm sure the limitation was the same. (Edit - unfortunately I dismantled that again because it had an unrelated fault, otherwise I could check that easily).
Also the fat 160gb has a different connection ribbon because the dual-platter 160gb drive connector is different from the other ipod drives, but I don't think that's a big deal, not sure what ribbon is used for an ssd with adaptor anyway, but the connection on the motherboard is the same, its just a different ribbon and you can replace that cheaply.
Edit - from tarkan's site