There is still ATA hard drives on the market. So you can upgrade to 500GB. Your system speed will be increase, because modern drives is faster. Of course if you get a 7200 rpm version is much faster, but bear in mind it runs hotter.
Or get an ATA SSD. It is slower than the any SATA ssd, but faster than most of the hard drives. And it is lower power hungry, and runs cooler.
Unfortunatelly, there is no space for an adapter.
MorphOS PowerBook G4 1,67GHz, 2GB Ram, 250GBHdd, ATI 9700/128MB
Morphos G5 2,7GHz, 8GB Ram, 500GB Hdd, ATi Passive cooled 9800 PRO/128MB