I definitely think we should see more of these in the future. I've given some thought to such a device, and here are my ideas on it...
Hard drive noise is a non-issue. Seagate and others have hard drives that use fluid bearings which GREATLY reduce noise.
Also, there's one critical point to the way the ipod works that affects the noise and longevity of the hard drive. The ipod doesn't play music off the HD - it plays music from RAM. It spins the HD up for a very short period, fills it's buffer, plays off RAM, and shuts down the HD. This, coupled with the fact that it's a DC device without fans and decent DACs is what makes it sound pretty darn good, IMHO.
I would personally use very large HDs - like 250g, and use the FLAC audio format - which is a lossless but compressed format. You get a bit of the best of both worlds this way. Then, just to reduce complexity, cost, and "audiophile-ness" - I wouldn't include DACs in a device like this at all. Leave that to an outboard DAC or receiver, since almost everyone uses one these days. Just use optical out.
And finally, like a REAL audio component, I want to be able to operate the thing without a remote control. I'm an oddball here, but I HATE remote controls for anything but TV. I usually spend more time looking for one than it takes me to get up and change things.
I think the time for a device like this has come. It makes 200+ CD changers obsolete and helps you preserve your CDs - use them on the device once, then store them away.
Maybe I should start a company....
