Well, the iPod I'm using was originally setup using iTunes on my GFs laptop, and when I connected it to my PC I could see and access the playlists and songs already on it, so it shouldn't be a problem.
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They already have been replaced in some systems. Look at the Asus Eee PC range for example. They use quite large Solid State Drives (SSD) instead of a traditional HD. The only limitation now is the sizes these can currently be compared to HD. Larger then 32GB and the price starts to escalate. Although this is starting to fall and sizes will quickly increase.
Solid State drives will also eventually remove the physical storage limitations of current harddrive platter technology. It will be some time before we see a SSD capacity equal to the current 1TB HDs, but I fully expect it to happen.
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