For what it's worth, I have a relatively large music collection (100gb+) and used an 80gb iPod for two years before getting a 32gb iPhone. The difference in usability was /huge/, to the point where I didn't miss the 50gb of space. If I didn't have a smartphone and had the option of a 128gb iPod Touch, it would be a no-brainer for me.
Personally, I don't think anything would be lost by discontinuing the iPod Classic, as long as something with a sizeable capacity replaced it.
Personally, I don't think anything would be lost by discontinuing the iPod Classic, as long as something with a sizeable capacity replaced it.