The hand writing is on the wall. After trashing flash-based MP3 players for years in favor of the disk-based iPod, Steve Jobs sucked it up and announced the flash-based iPod shuffle at Macworld Expo on January 11, 2005. When that was met with luke warm reviews for its small capacity and lack of display Apple answered critics with the iPod nano in September 2005.
The benefits to a diskless PowerBook are obvious. In early estimates, the battery life saved from removing hard drive motors and read/write arms is significant. This will also allow Apple to build much thinner and lighter machines (PowerBook nano, anyone?) Since they have made significant progress in their active/passive cooling techniques, they can probably squeeze a significant amount of the newest technology Flash chips in the place of a hard drive.
Apple could easily release their first portable without a hard drive by replacing it with upgradeable flash memory cards that vary in size. They've got a steady stream of cheap flash chips guaranteed through 2010 and they should be investing significant R&D resources to this end.