Apple can release a 2TB iPod and someone will post here complaining about it, Demanding that Apple release a 5TB iPod because they can't fit all their techno music on the 2TB. Plus they don't like the red click wheel
The iPod mini is small already. The microdrive is about as small as this new product will be Therefor, it won't have an impact on size just memory.
Now take out 20% of a laptop that is occupied by a hard drive and replace it with something the same size as a compact flash. This means the laptop can get smaller, maybe even start to get close to a PDA size. And with the ammount of memory being touted, a drive in the laptop itself might not be as necessary.
If you had a choice, would you get a Palm or a 6" Powerbook?