[sliverstorm]

There's one big problem with continuing to make headphones smaller- until we can connect directly to the nervous system, the smaller the 'phone, the harder it will be to maintain audio quality. (At least using traditional audio reproduction methods)

The only thing that crops to mind other than nerve stimulation would be mounting a driver on your eardrum. Think of how a piezoelectric transducer works, and replace the discs with your eardrum.