People would buy cheaper double density disks, drill a hole in it, so that the same diskette could be used as a 1440KB disk. Of course, they were of a far lower quality, and 'arj' (which was popular at the time) would often fail after the n-th disk.
Edit: heh, there is even a reference to drilling holes on the Apple website ;): http://support.apple.com/kb/TA39910