8 gb might seem small, but I don't find myself using the ipod function all that much anyway and I'd be curious to hear who has.
The phone, email, and limited internet functionality is the blessing, the ipod just a cool add on. I have videos (full length concerts, downloaded or burned from DVD) and no music to use on flights.
So 8 gb is more than enough for me, and it's plenty for limited data storage, this thing replicates my most used and useful laptop functions, so it's a godsend on the go.
When I want to use an ipod, I use an ipod.