Yesterday rumours were still saying the iTunes phone would come with enough capacity for 100 to 200 songs but today Forbes claims the iPod phone will only be equipped with a Sandisk TransFlash memory card of 128MB. This means the Motorola iTunes phone will only hold 25 songs.
It is possible to buy higher capacity flash cards for the phone but according to a person who saw the phone it is artificially capped at 25 songs, regardless of how much memory the phone has.
However, it is also possible that this person only saw one version. Some people say Motorola and Apple will introduce multiple models of this phone. More details at Forbes