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Earlier G4 iBooks will only recognise up to 120GB, later ones can use larger drives (change from ATA-66 to ATA-100 controller). The cut off point I believe is that those with 128MB non-removable RAM are limited to 120GB, and those with 256MB non-removable RAM can use the larger drives.
Be aware that fitting a new drive in an iBook is not for the faint of heart ;)