Great point. However, it bears mentioning that it is $400 for a laptop with 4 gig of memory that runs Linux. Most people nowadays can use up 4 gig of storage without much effort. Windows Vista alone would use up most of the storage on this laptop and forget using Office or Photoshop.
In short, yes the HDD makers have to be aware of this space but no, they are not an immediate threat. There is a CC coming up and I'd hope to hear something about flash drive plans.