My guesses are:

20GB didn't sell as expected so they are canning the player all together. (I hope this isn't the case)

20GB didn't sell as expected because people are waiting for the 40GB so they are putting the 40GB on hold for a while.

Problems with or getting the 40GB drives.

Problems with the 20GB they want to resolve before making more players.

Hopefully the Karma doesn't end up the the Rio Central