You can now answer that question yourself, or be a tech voyeur and see what the market thinks. MilkTape.
$15 for a 128Mb USB device disguised as a cassette tape (you know what that is, right?). The entire point of the product is to be limited in size so that you have to choose a cassette tape’s number of songs to give to your summer fling.
This TechCrunch article (a cute story, really) pretty much sums up my opinion. (My opinion being that of the girl, not the guy.)