day 1: install game 1, play game 1
day 2: install game 2, play game 2
"..."
day 5: uninstall game 1, install game 5, play game 5
day 6: want to play game 1 one again, oh wait, uninstall one of 4 games to play game 1
etc etc.
To say "just buy an external HDD!" is like saying "don't like the console? then buy a PC!"
Most gamers are still "casual" gamers who don't want to need extra peripherals to play their games. People with the 20GB and 40GB (and if this keeps up, 60-120GB also) are not going to be happy with this development.
I guess Wii and 360 are the only next-gen consoles as Sony is just leaving the console market all together.