As of late we have started to see a huge jump in not only the speeds of 2.5" hard disks for notebooks and server farms, but also in regards to capacities; sizes that were once impossible for notebook drives above 160GB are now hitting the shelves, thanks to new storage technologies.
The first technology we have to thank is the Serial ATA interface which has made connecting drives to systems a lot easier with its simple 7-pin data connection. With such a small footprint for the data and power cables, notebooks and desktop PCs use the same interface, allowing you to connect a notebook HDD to a desktop if you so desire. While going the other way is pretty hard, it's not completely impossible. Secondly, the introduction of NCQ or Native Command Queuing which helps the hard disk search for data out of order is also a god send.
Moving to the increase in size, we have to thank Perpendicular Recording. Rather than placing the metal bits in a lateral arrangement, they are setup in a longitudinal arrangement allowing more bits to be stored in the same area.
Today we have Hitachi's 250GB Travelstar 5400RPM hard disk designed as an upgrade for notebooks or as an add-in for servers using 2.5" drives.