There's constant debate over the correct amount of storage for a portable device. You want everything with you at all times in case you need it. On the other hand, you don't want it to be easy to lose everything (or, worse, have it stolen). Interestingly, most of these problems were solved with the Andrew File System (AFS) and its successor, Coda, over a decade ago. These filesystems were intended to replace things like NFS, and to support offline editing. The local hard disk was viewed as a cache of the server. If you edited files somewhere with no network access, and then lost the device, the most you'd lose would be your recent changes.
This kind of thing is constantly being reinvented. One of the ideas behind Google's Gears and the new client-side storage in HTML 5 is that the user can have documents stored on the server and on the client. If the network fails, the user keeps using the client. When the network is working, everything's safely backed up on the server.
Flash prices keep dropping, and it seems likely that 64GB in a pocket computer will be standard very soon. This much cheap multilevel-cell flash is already quite affordable, and it won't be long before the better-quality chips are cheap enough. At 64GB, there's enough capacity for all of the data I regularly access, and a little bit extra for stuff I access infrequently.
Of course, the idea of "offline" use is becoming less and less meaningful. There are few places where I can't get a GPRS signal, and not many where I can't get a UMTS signal. With a big file server and a mobile Internet connection, the only difference between data I do and don't have in my pocket is the speed at which I can access it.
In the future, I expect to see a mobile device's local storage treated as just a cache. The real store will be on a server somewhere, either owned by the user or provided by a third party in exchange for money or the ability to generate better-targeted advertising.