Because last fall, for the first time in iPod history, they -reduced- the capacity of an iPod line when they cut the 160 GB Classic. Previously they offered 80 GB and 160 GB (the dual-platter version) models. They cut the 160 and bumped 80 to 120, currently the largest single-platter drive available.
They cited poor sales as the reason for the elimination of the 160. While the market for the 160 outside of us music and video junkies probably isn't that large, my guess is the decision was also motivated by the desire to simplify the Classic production line and Apple's fanatical obsession with "thin." The dual-platter Classic (and the dual-platter models before it) are thicker and therefore require a different casing than the single-platter models. Having to support a second case size adds to production and support costs compared to having just one type of case. So if it wasn't selling well, Apple would rather have that money sitting in the bank.
In light of the reason given by Apple and my speculation for the elimination of the 160, the availability of a 240 GB drive doesn't change the situation: too much iPod for most consumers, a second case size to produce and support, and a "fat" iPod. Apple will probably keep up with size advances in single-platter models until availability and price of suitably large flash chips allows them to scrap the disk-based models entirely.
