To answer the two posts above:
@Dhelsdon - You shouldn't limit yourself to the rapidly dwindling choices available for PATA 2.5" drives. You will be just fine with your 40GB internal for the OS and then attach external USB storage for your iTunes library--this also has the added benefit of making your entire library portable. I use a bus-powered 500GB external USB drive and works perfectly. I detach it every once in a while to do a backup to another drive, and when I outgrow the space I can just buy another external drive.
Duh.. It totally slipped my mind about the external drive. One other question, this will always need to boot from usb right?
If I plug in my external drive and my usb boot into a hub I shouldn't have any issues right?