I guess in the race for slimness they've dumped a 1.8" HDD in there hence the drop in capacity to 120gb, as I think this may be the only capacity you can get now in this form factor - hence the iPod Classic only being a 120gb now. Most, if not all, of the "netbooks" use the cheaper 2.5" form factor and suffer a bit more thickness to keep costs down.
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