WCF,
Why not buy yourself an external USB caddy to fit the 120GB disk into? I'm sure that there'll be a USB 2 port on the VAIO.
I don't think that you can get 1.8" disks much bigger than 60GB right now, and I'm assuming that the disk you've already got is a 40, so there isn't that much to be gained by upgrading anyway.
Looking at the specs of that PC, the only user-upgradeable item seems to be the memory - which you've already done.
SD