I suppose it all depends on when the PS4 is going to be realeased. If it's going to be within the next two or three years, then Sony should be able to manage sticking with Blu-ray for PS4 games, particularly if they use Quad-layered 100GB discs.
Even if Sony chooses not to stick with Blu-ray for PS4 games though, I have little doubt that the PS4 will be capable of playing blu-ray discs.
In my opinion, the smartest move Sony could make with the PS4 is to stay consistent. Use the Cell Processer again, but use a more powerful version of it such as the PowerXCell 8i. Use blu-ray but improve the disc read speed and introduce Quad-layerd discs. Increase the HDD size to 500 and increase the amount of RAM. If Sony could do all this while launching the PS4 at $399.99 with all the PSN functionality the PS3 currently enjoys for no cost as well as other expanded features such as Home, full compatability with PS1/PS3 and maybe even PS2 games. Finally, bundle it with a PlayStation Eye, their new motion controllers, an improved DualShock 4, and a bluetooth wireless microphone. I think Sony could have a real winner next-gen.
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