OK, this is just silly. They clearly had to throw away some of the capacity to get that number. Or am I am being duped?

I think you're right.

But I also think it has a USB3 adapter on the drive itself (straight connection to the Pi USB) and an altered form factor to fit the Pi. The latter is hard to tell from the description/photos, though.

Yeah, I just noticed the USB connector, so thats another couple of bucks you don't have to shell out for if you were just fitting a standard HDD, that could be $5-10 depending on what you got.

Sadly, the 320GB WD Blue 2.5 drive is $22 on Amazon, so its not even really a good deal. When you consider the volume of the market its pretty gimmicky. However, if this drive is actually lower power usage, it could be worthwhile for certain types of embedded applications.

Do you happen to have a link for that?

I've found a WD Blue 3.5" 320 GB for $22 [1], but am not seeing any 2.5" for less than $37. Those are SATA, so you'd need a USB to SATA adaptor. The PiDrive is USB already.

[1] http://www.amazon.com/Western-Digital-Caviar-Drive-WD3200AAJ...

Purchase page:

http://wdlabs.wd.com/products/wd-pidrive-314gb/