I for one still want EXTREME high capacity in my portable device - whether that be an iPod or iPhone, or preferably both. There is a LOT of media that I want to play (and don;t want to "maintain" in the device on a daily basis), and most is coming at higher and higher quality, which exponentially takes up more room on the device. And even games and other apps are becoming much higher in storage needs.
Unfortunately, over the last year, NAND flash memory has remained very high priced for larger capacity modules, so at this time, a HD is really the only thing that's POSSIBLE at a reasonable price point for capacities over 128GB. I'm not sure that prices of 64GB NAND flash module will even allow a 64GB iPhone or 128GB iPod Touch this year.
I don't necessarily care about whether the storage medium is flash or an HD, I just want high capacity. The iPod Classic is 160GB and even that is not enough. I'm not sure what the short term solution is for Apple, though, especially since we all know they are dying to get rid of the Classic. But unless they can match the current 160GB Classic, I hope they don't discontinue it.
Maybe a solution is to put more NAND flash SLOTS in the device so that they can use the much lower priced 32GB modules, but that's probably not feasible given the extremely thin profile that Apple seems (inflexibly) devoted to.
Tony