Taking into account faster CPUs and more on-board RAM (better compression tech available for use), downloadable content, availability of hard disks (etc) - I think DVD-9 is EASILY enough space.
It would be a very rare game that REQUIRES more than 10Gig of COMPRESSED space - and those can be simply delivered on multiple discs.
BluRay IMO is complete and utter overkill. It lends itself to lazy development practices more than anything else (wasting space). And its ironic that a BluRay drive (PS3) is slower than the DVD-9 drive in the 360.
If they should have improved anything, it should be an ungraded DVD-9 drive with faster seek/access times, and faster read rates. That would have been much more useful!
Gesta Non Verba
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