I suspect with next-gen wii HD and xbox 666 will use SD cards on retail versions and big dscount for digital delivery,for backwards compatibility you will have to have an add-on dvd for backwards compatibility with older gen titles.
The Add-on DVD will also reduce the cost of the core product, as:
1. DVD and Blue-ray players require a payment of a licence $ on each machine capable of decoding dvd+blue-ray. As the core-product will not have a dvd player this will reduce the cost.
2. You can run direct from an SD card, it doesn't need caching to harddisk so much. hence reducing the cost of the core product.
3. SD cards readers are very cheap to manufacturer.
4. With an SD card games can be updated via the web site and games saved to the SD card. This is similar to the way TomTom operate.
5. I suspect a premium version of XBOX and WII HD will have a hard disk, to allow the support of digita downloads (unless they allow you to download digital downloads to SD).
In 2008 the largest SD is 32gig, but the standard has a theoretical limit of 2Terabytes.
With Sony they will probably stick in some propriety tech such as Blu-Ray2 or Sony MemoryStick
