The convenience of having all of your games accessible at the click of a button anywhere you go, opportunities for lower prices (although MS has a LOT to prove here; XBLA/Games on Demand has a long way to go to rival even PSN, let alone Steam), the ability for niche games to be localized or even get released on consoles at all... there's a not inconsiderable upside to digital.
It's just arguably outweighed by the downside, at least for now.







