Optical drives need to be kicked to the curb! Flash is the next-gen future.

[NJ5]

Flash is currently produced on the 50nm process node. At 30nm a 10mm by 10mm area of flash will likely be up 2.5* as dense. So if you had 1gb on that flash, you would now have 2.5gb. Intels 32nm process looks to be coming on stream by the end of 2009, so it does follow that they could easily start producing flash at the 22nm and fit over 4* as many transistors in the same area of silicon. So that flash you can buy on Newegg for $5 which contains 4gb of storage, will easily hold 4x that quantity by the time the next generation consoles are being produced.

$5 for 16 GB is your estimate, I think that's still too much. Probably 5-10 times more expensive than optical media. You don't need to buy many games to cancel out the savings on the optical drive.

I mentioned HDDs as they will become a required part of the console kit as optical drives simply are not fast enough to deliver the content a more modern console will require in a timely manner.

Why? By the time the next generation comes, 4x or 8x Blu-Ray drives will be affordable, delivering much higher transfer speeds than PS3/360 optical drives. The only reason why a HDD may be needed is for downloadable content.