Although people's music collections are increasing in size, it seems obvious that hard drive capacities are increasing at a greater rate. There comes a point when you've got so many CDs that you back off a bit simply because you've got so much and you are less likely to experiment with new, unheard music. So, once the average portable player capacity curve surpasses what people have, on average, then FLAC will increase.
I've made it clear that I could never have elected for FLAC or another lossless codec 5 years ago when I first ripped our entire collection. Every file I ripped back then is now backed up to ~10 DVDs just for archival purposes but will likely never be touched again. And many other people are in the same boat. With so much extra capacity, I can go all out and pay the extra money for FLAC. For mp3 storage, most people don't need to do a dang thing. Their built-in hard drive is likely plenty big. My FLAC collection is around 350GB and it's not real likely that someone would have a 500GB drive in their system nor would they devote that much to it. But for a measly soon to be $100, you can buy a 500GB hard drive and you're set! Lots of people are setting up home servers now and many of those people are likely going for a terabyte or two just so they can have plenty of space. Once they have the server, they gotta use it! I would have never built a 7TB server like I have now 2-4 years ago because of a lot of reasins:
1. The biggest is that I didn't know about Media Center. I never would have even cared about storing our DVDs on the server without an incredible program for accessing the content, which MC is the answer.
2. VERY expensive.
3. Less knowledge so I didn't even know much about lossless or even higher bitrate lossy. I was actually living with 64Kbps encoded MP3s for a while. I gradually realized what a mistake it was down-encoding my small but large collection just so they would all match and to save space. I noticed when I bought a good set of computer speakers with good high-end response. It didn't sound good at all and I knew it wasn't the speakers.
The key month is around July of last year. That's when I discovered MC. MC has cost us easily $20,000 (no joke). When I add up the server costs, new HTPC building, remote controls, tons of CDs and DVDs, FLAC efforts (re-ripping everything), and all the time I've put into this stuff is worth thousands more. But I enjoy it and MC has allowed me to rediscover lots of digital media. It really helps that they aren't out to get us like Apple is--where they could start disabling different functionality from contract restrictions, etc.