I have enough LPs recorded to fill 16gb many times over, and I've only recorded a few hundred of my LPs, about 20% of my collection. No downloads for me at all (no point having a decent audio system and putting lossy compressed audio through it!).
My needle-drops are 200khz (100 for mono) variable bitrate OGG Vorbis (much better than mp3), so they're nothing unusual.
Incidentally Sansa mp3 players are great for OGG and FLAC - can't do that on an iPod.

Heck, I could fill 16GB in about 50 tracks (as long as those were tracks were by Yes or Genesis or something

)
However, I am - of course - in the minority. Most people I meet just use a digital five-finger discount.
One thing though, this isn't a new phenomenon. Anyone old enough knows that in the 80s you could walk into many shops and buy blank tapes, C15 for computers or C90 for audio.... and nobody ever believed they were all being used to make new games and music. Then it was blank CDs. Now "blank" ipods. It's nothing new.