As mentioned on SN, Toshiba was in the process of manufacturing higher capacity microdrives. It announced today that it has a 2 to 3 gigabyte hard drive which will go in mobile phones. It is an 0.85 inch diameter disk that can hold 30 hours of music.
The drive is the size of a US Nickel coin. Toshiba has not announced how much this drive will cost. Toshiba is filling a growing demand for such drives.
So far the smallest hard disk drive is Hitachi's one inch drive. Production for Toshiba's drives starts in 2005 and orders will be taken next summer. Source