Solid state is the future...once we can get gigabyte+ size memory at affordable rates it is going to be very hard to sell anything *but* a solid state device. How long will that take? 5 years? It makes perfect sense for Rio/Empeg to keep designing these things. Practice makes perfect. I'm sure that the lesser of their current range will be retired soon.

Benefits of SS over HD:
1) Lower power consumption.
2) More reliable at lower temperatures (no more "No HD found" during winter!!)
3) More reliable in the presence of heat, vibration and magnetic fields.
4) More reliable generally - IIRC flash will generally hold it's contents for upwards of ten years, and has a lifespan of in the order of 100,000 write cycles.
5) Smaller.
6) Lighter.

One of my best friends who is currently visiting from England has one of the Panasonic SD card mp3 players. Lovely bit of gear - uses 1 AAA cell, tiny etc.., but still plenty of room for improvement, especially in the UI area.

As for market saturation....who are you trying to kid? Outside of this board, I only know of 3 of my friends who have portable mp3 players. The majority of the population are *just* wising up to them.