The 1.8” drives just fit into a regular sized iPod so it’s common sense why they didn’t put them into the iPod mini. There’s no possible way they could have fit one in there.
I’m sure Toshiba will try to pimp their 0.85” drives to Apple in the future for next gen iPod minis. Unfortunately, they only have 2/4GB models and they’re not shipping in volume like the Hitachi Microdrives (which use more common industry standard connectors = lower cost). At any rate, 4GB is more than enough music for a device of that size. I see tons of chicks using them at the gym and they’re never there for more than 2 hours.