Software for the PlayStation Vita will be distributed on NVG Cards, a new proprietary flash card format, rather than on Universal Media Discs (UMDs) used by the original PlayStation Portable.[5][15] NVG game cards will be available in 2 GB and 4 GB sizes. 5 — 10% of the writeable space will be reserved for save data, patches, etc.[16] Higher-capacity game cards are planned to be made available for future releases.[17] - http://en.wikipedia.org/wiki/PlayStation_Vita#NVG_card
Obviously it will have digital distribution to some extent, but PSP:Go showed Sony that the market is not yet ready for DD only. If the Go had done better, Vita may have ended up pushing DD more strongly. Perhaps in 4 years time there will be a Vita:Go experiment.
Edit - Improved source, more detail.
