Create a new disk and then mount to my existing $20 instance

Officially? No. Unofficially, Linode announced their beta for Block Storage which will allow you to add disks to your Linodes. $.10/GB normally, free during the beta.

It also depends on what you're talking about. Every Linode comes with a certain amount of space. You can always divvy up that space into as many disks as you want right now.

Block storage is for a large amount of additional storage for your Linode.