Because let's face it, 8Gb isn't going to cut it with any music fan. I have a 50Gb+ music collection (with a few audiobooks and podcasts). The insane price of the iPhone (when you stomach the contract) for an "all in one" device doesn't work for anyone with any kind of music collection. And that's just music, 8Gb for video as well is pretty weak. Stick 4 or 8Gb of flash memory into it if the OS needs it and store the media on the HDD, it would be great. The 80Gb iPod Classic is actually smaller than the iPhone so I wouldn't say it is impossible to get one in there. Next rev?