I agree that 100 songs is a limitation. I think there are a few people who won't mind but in the end the number has to be higher but that is just a storage issue. As the price comes down on flash memory and the ability to put more memory onto smaller chips increases I think you will see more phone/mp3 players out there that are both practical to use and powerful enough for the high end users...
It may not kill the iPod but it will gnaw at Apple's margins, if not take a big bite.
As for song costs... the phone I am talking about works just like the iPod. Load it up from your computer.
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