I don't know how my Nomad Jukebox handles input levels but it must be an auto-leveling scheme... I can only tell you that it works very well and I have been highly impressed with the results. I didn't actually buy this to be anything more than an MP3 player, but I can testify that it makes a darn good portable recorder. I have used in in my home studio in place of a DAT machine for quick recordings, and again it worked great. The only thing is that the Nomad can only record about five minutes at a time before dumping it's RAM to the HD, but it does so seemlessly and then I use Sound Forge to restitch and edit the tracks. This isn't the end-all portable digital recorder but considering that it's a great MP3 player first and foremost, the record feature is just a great bonus.

As to the hard drive size, I have a reliable friend who swears there is just a notebook HD in these things and that he replaced his himself. I haven't needed to do this but I believe him.

BTW: Tascam has come out with a cool little pocket four track recorder/MP3 player with a built-in MIDI sound module called the Pocketstudio 5. Lists for $599. This may interest some of you:
http://www.tascam.com/products/pocketstudio/pocketstudio5/index.php