I just ran into the exact same situation - DDS4 drive too small on PE2600.
After doing a ton of research, I ended up with an Exabyte VXA2 drive.  I've
been running it with no complaint for about 2 months now.  I got an external
and left the DDS drive installed - I can still use it to restore an old tape
or whatever, although I doubt it'll see much use now.

I was looking for 80GB native capacity.  What I did was to compare the total
cost of a drive, scsi cables, and 15 tapes.  AIT impressed me, but it was
off the chart price-wise.  DLT is proven technology and highly recommended,
but Dell's pricing was out of line.  If I'd chosen DLT, I would have had to
buy a different brand, which is OK - just don't judge backup drive pricing
by what they charge at Dell.

The Exabyte tapes are expensive, but the drive itself was only about $1200.
Although I didn't shop DLT very hard, the Exabyte was cheapest of the
options I looked at.  More importantly, Jeff Middleton has Exabyte deployed
at a large number of clients, and has found it reliable over a period of a
couple of years.  So far, I'm not sorry with that choice (an added benefit -
my backups run in about half the time of DDS).