I'm pretty sure I mentioned this when I picked up MinGol 5 last summer, but here is my experience anyway...
I bought a 20GB model at launch, because I didn't like the silver trim of the 60GB model and I didn't need the wi-fi or the card slots, so I figured 10,000 yen for the extra disc space was unnecessary. I bought Ridge Racer 7 at launch, and installed FFXI on the HDD from my PS2 discs - you'd think that was about 8/9 GB. But when I bought MinGol 5, I didn't have enough space to install it, even after deleting all the movies I downloaded from PSN. Apparently the FFXI installation created a much bigger partition than necessary (10GB?) and the actual free space of a 20GB drive is more like 15/16GB for some reason (locked caching area?).
Anyway, I uninstalled FFXI and installed MinGol 5. But because I've got the 20GB model, the installation thing is a problem for me. I've read that Yakuza 3 and Lost Planet both have 5 GB installs too, though I don't know if this is final. I am planning to buy the former, and hopefully it will fit on my drive, along with the two games above. After that, I have to start deleting installs.
To those saying "buy a new HDD" - buying a larger HDD just to install games does seem a little extravagant. I can either spend 20 mins deleting+installing each game, or I can spend $150 on a large drive. Spending that amount of cash just to save a few hours over the course of this gen seems like a waste of money, personally, but the alternative is not exactly great.