Every hosting account is given a portion of disk space for use. Most basic Web sites don't require a great deal of space, though media files (pictures, video, Flash, etc.), moderate-to-high email volume and databases can fill up your disk space quickly. Unless you're certain you're going to need a lot of space, it's most cost-efficient for you to choose a smaller package and upgrade later.
Sure, smaller packages don't benefit Studio1337 as much financially, but we didn't get to where we are by encouraging people to waste their money and our resources!