That's a huge difference. There's rumours the new model will come with as little as a 16GB and a much larger 500GB HDD built-in alongside the usual 320GB. Looks like the 160GB model is going away.
With such a dramatic cut in HDD space with a 16GB model that could be a huge-seller in price terms. At the same time could also be a crippling model considering the amount of games that require big installs. I think GT5 is atleast 20GB.
Xbox 360 launched years ago with a bog-standard 16GB (13GB useable) but times were different then. Looks like Sony is going for a big Christmas seller with the 'core' model..