From what I read (somewhere, for the life of me can't remember where) that he will have an SD Card slot. If that's the case, he'll be expandable up to 8gigs which even if you have a library of 200 or so gigs...>.>, you'll still be able to put a LOT of music on him.
Edit: Ok, found where I read it. BBTS says there will be a Mini-SD slot in which case he will be expandable up to 4gigs.