World's first 256GB USB Flash Drive
physorg.com
physorg.com
Things like this thumbdrive are all about small size for ease of transport and usage (even a 2.5" external drive is awkward to hook up and use when you're in an airport/on a place/on a bus/etc). You would obviously want to use some sort of drive encryption (TrueCrypt/PGP/etc) and do regular backups if the data was important enough to not want to lose.
As far as what you would use it for? my music collection: ~89GB my photos: ~35GB (this only starts in 2005, I haven't scanned in older photos) $HOME backup: ~20GB (which includes some photos not counted above) custom bootable ubuntu 'live' partition: ~5GB cpan offline mirror: ~1.7GB
The list of things goes on... This is not even including ripping some movies to it for watching 'on the go'.
[EDIT]: That said, the prices will have to come down. Currently, the 128GB thumbdrives on NewEgg are in the ~$350 price range which is too expensive for my tastes... (even the 64GB thumbdrives are in the $120-$150 price range)