BusinessWeek reports that hard drive manufacturers are thrilled that more and more mobile phones will be incorporating hard drives (A Gold Rush in Little Hard Disks). However, I think that cellphone companies are being a bit optimistic:

Cell phones with hard drives could help wireless service providers increase their customers' data usage. The carriers want consumers to download songs from their networks, thus using more wireless minutes each month. The problem is that consumers aren't accustomed to doing this.

The new phones could act as training wheels by allowing people to upload songs from their PCs, the way they already do with MP3 players, says Nokia's Shallow. The expectation is that consumers eventually will start downloading songs wirelessly. By that time, hard-drive technology should improve, too.