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Iyasu said:

The GCN had it's issues beside getting decent (not great) 3rd party support.
The 1,5Gbyte mini DVDs and the lunchbox design didn't help, and that the PS2 was out earlier, was as a cheap DVD player and had the cool image did it's part.

I have nothing to add to the second paragraph.

Most games in that era would have fit fine on the discs, the discs are actually the most exaageraated issue, it was mainly games with loads of cg video it was and issue for. GC and the Xbox lost out simply because you can't beat a market leader utilizing a strategy that suits them as you effectively lose out to brand power, it wasn't really down to the headstart as the 360 proved.