Yes, Virginia, there are real 128GB USB flash drives now
Be warned: there are a number of fakes out there. However, as of June 2009, there were three 128GB USB flash drives available from reputable companies. Kingston was the first, making an announcement mid June of 2009.
Also in June 2009, Edge-Tech and Patriot announced they also now have 128GB drives.
In 2008, a number of companies released 64GB USB flash drives. In 2009, there started to be claims that there are also 128GB USB flash dives available. While there are reliable 64 GB USB thumb drives available from well known online and off line suppliers, there were no actual 128GB capacity drives on the market until June 2009. There is a supply of counterfeit goods from China, made of hacked 512mb, 2GB and, 4GB flash drives formatted to appear as 16GB, 3GB, 64GBGB and 128GB flash drives.
However, on June 15, 2009, Kingston announced they are selling a 128GB USB flash drive. Because of the enormous number of fake 128GB USB flash drives on the market, it is very important to know what Kingston's 128 GB drive looks like.
The drive is in the new Data Traveler series 200, which has three sizes: 128GB, 64GB and 128GB. The 32GB and 64GB drives are readily available from reputable online sellers such as Amazon and Newegg, however, Kingston said each 128GB drive (MRSP $547) is built to order, *updated*, but they are now available.
Currently, Kingston has the drive in stock. The drive can be ordered from Amazon, and other reputable online retailers
The Data Traveler 200 line is very distinct from other series of USB drives sold by Kingston.
128GB drive shown in open and closed state.
*Update* In March of 2010, there are now six real 128 GB USB drives, and while some prices have come down a little, the cheapest price I have seen from a reputable source is about $300.
Corsair, Super Talent, and Team x091 have drives available now. As well, a relatively unknown company called Unique IT has announced the 128 GB Integral Titan in the UK, although there are no details about its availability.
Be aware; there are not currently any 128 GB drives available from Sony, Samsung, or generic suppliers.