One real worry about smaller hard drives that are used mainly for portability and backup is the durability. The smaller the device the easier it is to break. I think GigaBank has a nice design but don't expect to drop it.

Measuring 2" x 0.5" x 2.5" and weighing less than two ounces, the GigaBank 6.0 has a miniature and lightweight design. The device can be used to store or back-up files, store MP3s or transfer files from one computer to another.

The GigaBank 6.0 is powered through a USB 2.0 port (USB 1.1 backwards compatible) which, when not in use, can be tucked into its enclosure. This hot swappable device comes along with a carrying case and a USB extension and supports Windows XP/2000/ME/98SE.[via techtree]

I/OMagic expects to ship the storage device in May 2005 for a suggested retail price of $199.