Still, I don't understand why I can't find HDD smaller than 500GB and cheaper. I guess they mass produce to bring cost down, or maybe 500GB is the most efficient GB/$, but I'd be happy about a 250GB HDD for less.
A hard drive is a set of magnetic platters that's spun by a motor inside a casing with a circuit board. A read-write head rides each platter atop a thin boundary layer of air. The platters are the expensive bits that have QA/QC problems.
There may be 1-5 platters fit in conventional drives, or up to 7 in helium-filled drives (thinner than air).
To build these, it costs the hard-drive maker a given amount for the casing and circuitboard and motors and such, and then some other amount per precision-manufactured platter. A drive that has 5 platters will cost a lot less to make than 5 drives each containing 1 platter.
Hard-drive builders like to work with the same basic parts, so when they switch to a 500GB per 3.5" platter mark, they'll tend to have drives at 500GB, 1000GB, 1500GB, 2000GB, and 2500GB.
The smallest HDD in a form factor tends to be set by the smallest platter they still bother making, and the price for it tends to be remarkably high per gigabyte because there's less data to amortize over the parts needed to make a drive. Generally it will cost them about the same to make a 500GB platter as it cost them to make a 200GB platter a few years earlier.
The cutting edge pushes HDD areal density. A 2.5" platter is smaller and will hold less data per platter than a 3.5" platter.
