I've found Apple's refusal to upgrade the Classic really irritating, mostly because now I carry two Classics around to hold my music collection (pretty large, plus I ripped my large CD collection at a high sample rate), and am at the point where I have to micromanage the individual songs just so I can get new purchases onto the system.
The belief that 160GB is "enough" is just nuts; I think Apple holds to their position in part because they are "forward-thinking" and heavily invested in the Cloud (and determined to make money from the Cloud). Reading this thread, I understand that there are drive size/availability issues, but I've seen ads for places that will install large hard drives, so it's at least possible in some of the Classic form factors. Which means that Apple COULD make a larger Classic.
I live in NYC, and streaming audio doesn't work at my place of work, nor during most of my commutes.
I feel like Apple has really dropped the ball here, despite its position as a technology leader. They're killing the Classic with Benign Neglect, until - sometime within the next year or so, I imagine - the point that they kill it with a bullet to the head.