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you can replace the HDD in a classic with a CF card or and SD card. That's what I did. I think there is a 1 TB classic out there with an SSD.
 
Does ipod touch have a hard drive or flash memory?

Flash. It would be way thicker, slower, and less reliable if it had a HDD.

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I have a feeling we may see a 128GB iPod touch come this next update, assuming the iPhone will get it as well.
 
So a 64 g ipod touch has biggest flash memory available and better choice than the hard drive based ipod classic for large storage?
 
Depends on your music preference. SSD is great for gapless playback especially if you have high quality music (talking about 320 kbps+) but at the same time, the Classic has more space to store the high quality music. The Classic is believed to have 256 MB of RAM for gapless playback, though have very large music files will cause the hard drive to spin up more often when it offloads the files to the RAM lowering battery life.

The iPod Touch is the iPod device with the largest SSD storage to answer your question.
 
I have had both a classic (well, a few classics) and an iPod Touch with 64GB, and currently use both.

The classic has the old style HDD, and it was a somewhat unfortunate fact that HDD failure occurred in a small, but recurring number of them. For my part, I had two HDD failures with iPod classics at different times. Each of them were still under warranty when the HDD failed, and both of them were replaced more-or-less immediately, without fuss, or problems or recourse to ludicrous sub-clauses when I presented the sales receipt along with the faulty device.

This excellent customer service and honouring of warranties was one of the main reasons I switched to Apple computers. Perhaps I ought to add that the classics which died on me were all the 30GB versions (not quite sure which generation that was). The ones I have bought since then, namely the 80GB, and 160 GB versions have worked flawlessly.

The big advantage of the classic is the capacity of the storage; for those of us with a large music library, who love music, and wish to have our entire library on one portable device, nothing beats the classic, which is why I always have at least two of them simultaneously.

However, the iTouch is a lovely device and is capable of much more than the classic; (I don't use it for much other than music, but it will readily lend itself to an awful lot else). The SSD is a lot faster, and a lot more stable than that of the classic. Indeed, its only limitation is that (for me, at least,) 64 GB (the maximum size currently available) is no longer sufficient to play host to my entire iTunes music library. If an iTouch were to be made available with 128 SSD, I'd buy it in a heart-beat.
 
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