The point is flawed. If you aren't going to listen to 90% of your library, why even waste space for it? For that 0.00000001% chance when you remember you loved Fall Out Boy as a teen and want to relive those memories?
"I know I don't listen to half my music. The problem is, I don't know which half."
The last thing I want to do is shuffle albums/tracks between lists that keep track of which items I listen to, and which ones I don't. And it changes over time, too. That would probably be several days' worth of work. Far, far, far cheaper just to buy a larger device.
I mean, there are smart playlists that can be based on last played date (eta: or ratings, or play count, for that matter. Honestly the iTunes smart playlists are a powerful but hugely underused feature), and iTunes fully supports selective syncing where you can just sync certain playlists you like and the smart playlist, and nothing else. iTunes was built as a music management system. Regardless of the crud that has been added on since, that's still what it is at its core.
