I was pretty disappointed with the iPod Mini, too. There’s only $60 difference between the iPod Mini and the smallest (HD space-wise) iPod, but the former has only 25% of the HD space.
But GarageBand sounds way cool. I have Soundtrack and it is pretty slick as well, but adding audio recording and editing at that price is incredible. I’ll definitely be picking it up. If Apple would only do this kind of pricing on their hardware.