Re: why Flash ?
I can think of several reasons. First memory usage is interchangable as either RAM or storage. Second battery life. A notebook churns the HD more than an iPod which basically quickly downloads the next item and goes back to sleep. Third, to be first.
Remember, though, this is just a rumor.
I know the whys of flash, just talking about cost. Going flash-only will make this the best ultra-portable ever, but it will be very expensive.