Truly the stuff of science fiction, Toshiba has demonstrated a new hard drive that is 0.85 inches, and can store 2GB of data. The company plans to start commercial production by the end of 2004.
Just for comparison, a US nickel (5 cent piece) is 0.83 inches in diameter. The drive is 3mm thick. Samsung has also said it is developing a 0.85-inch hard drive but did not say when it would be available.
Here are some articles on the subject: at technovelgy.com, gizmodo.com, engadget.com, howstuffworks.com, and toshiba.co.jp.