I think they'll hit the maximum storable on a drive before long - they're getting to the limits of what perpendicular storage can manage... pretty soon they'll reach the point where it's simply not possible to place two magnetic charges any closer together.
They can always add a few more platters, but it means that 3.5" is going to be out ahead of 2.5" for the foreseeable future.
IMO SSDs are going to catch up and overtake long before that - look at the current rate of accelleration... it's already hitting 250gb levels, and it's much more expandable than mechanical systems.
Hard drives will still have a use in long-term storage where noise is less of an issue, unless the SSD manufacturers manage to overcome the relatively short maximum lifespan of their products.