I just found this on Slashdot I would have posted it as news but there has already been so many stories on it I felt I should be here for those who are interested

(also its just a rumor as far as I know)
Posted by timothy on Monday January 05, @10:28PM
from the melts-in-your-mouth dept.
squiggleslash writes "One of the aspects of the '2G mini-iPod' rumour that's so far made it unlikely is the lack of a tiny, cheap, 2G, drive. Well, today Cornice has announced a 2G hard drive (PDF, 100k) that fits the bill. It's available for about $70 in lots of 100,000. The Mac Rumour sites are going faily nuts over this for obvious reasons. The reason the drive is so cheap is that it contains virtually no driver electronics, there's not even a memory buffer - this is the equivalent of a 1980's RLL or MFM drive. At $70 it seems unlikely that the mini-iPod, assuming it's announced tomorrow, will be under $100, but on the other hand the original iPod sold for the same price as the harddrive inside it. Here's hoping..."