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i have the same issue.
i only have 160gb
but the abysmal handling of large quantities of music is a major turn off.
i have resorted to using winamp with a touchscreen skin.
i have lost all of centrafuses features such as stacked playlists, which i LOVE, and easy of use while driving
but winamp does handle my entire collection with breeze.
i also use winamp cuz i can control it with my ipod touch.
i use the iTouch as the "passenger control" device lol
my passengers love it, being able to control the music they want to listen to right on the ipod.
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