Sandisk announced its second generation of flash memory-based HDs.

This HD features 32GB storage capacity with a SATA interface.
Its MTBF is evaluated to 2 millions hours, and data transfer speed are 67MB/s in reading and 45MB/s in writing mode, with an access time of 0.11 ms in other words 100 times faster than a plate-based HD.
In addition, power consumption of this flash memory-based HD is 50% lower than a 2.5" HD during reading/writing session, as it does not require power when it is idle.
The last good news is its price, as it will be offer to OEM at US$350; so far there is no plan for a retailed version.
So the perfect storage unit for the rumored Apple subnotebook? if it is powered by MacOSX Leopard Mobile, it would give users around 27GB for storing data and applications
[update]
As noticed by Steven, SanDisk also makes a 1.8", 32GB flash memory-based model, which might be more suitable for a subnotebook:
http://www.sandisk.com/Oem/Default.aspx?CatID=1478