Ok, I admit it, the iPod part was just the shameless hook. But that doesn't make the possibility any less true.
According to Seagate's projections on hard drive capacity:
[We show] a 2.5-inch drive reaching 1TB by 2013. Using that calculation and assuming 40% growth stays as the annual growth rate, a 1.8-inch would reach 1TB by 2014.
On one hand 1TB seems so close, but maybe Seagate would be a bit more inclined if they knew just how many Cher CDs Brian Lam* has in his closet.
Disclaimer: I am not fully apprised as to the specific listening habits of Brian Lam, but I am sure that they are perfect...whatever that/keeping my job may entail. It can be Cher, even. We're not judging here—at least not vocally.
When Will We Have Pocket-Sized TB [gearlog]
DISCUSSION
HD capacity increases have slowed down a bit in recent years due to a ceiling being reached with the current HD technology. That's why Seagate is the only company with 750GB drives, they are, currently, the only company with the tech to do it. (and maybe they're sitting pretty at the top with no competition hence no real need to whip out 1TB drives just yet.)
However they all reckon they have cracked the ceiling so things should resume to normality soon enough.
One positive side effect of all this is that it has given Flash a chance to sort of catch up and get in to the realm to being affordable and at a capacity to be taken seriously by the average consumer.