agreed- I can't help but have the impression that most of this stems from having a "hoarding" mentality (similar to those old women you see driving around in the 1990's minivan filled to the brim with plastic bags- seriously, what's the point?)... I'm not saying it's unreasonable for people to want to carry their entire music collections with them, but it's definitely not the mentality of the majority of the iPod-carrying public.
my personal preference is to keep my most-listened-to songs on my iPod, along with my most-watched videos and a collection of applications... a solid 60-100GB would be plenty for me at this point, anything beyond that would be overkill.