You are surprised that a game that was 720p on 360/PS3 can't run at 4K on Switch, which has lower specs than 360/PS3 in handheld mode and only slightly higher specs than 360/PS3 in console mode?

Also, LA Noire is only 4k on XB1 X and PS4 Pro, not on the base models, it's 1080p native on the base models. 

Not to mention flash drives are generally faster.  A Switch card is a hair slower than the internal NAND storage.  Which is on par, roughly, with a 5200 RPM hard drive.  That's not fast.

Also, $5 IS a me being pretty steep and high in my estimates.  If we assume $5 to produce a flash drive of 32 gigs that sells for $10, that is going to put their margins at 25% or less when all factors come in.  I'm being quite generous to those arguing the costs are high.  The reality is, I doubt the production cost goes up that high and thats before factoring in, as you said, differences between MROM costs and rewritable flash storage.

As for why not bigger, well several factors.  One is not wanting games to bloat to sizes 2 or 3 times the size of the Switch's internal storage.  Another is 32 may have been the limit before it did become prohibitive.  If costs are $4 to $5 at 32, if we assume linear cost increases (not always a safe bet), then you hit $8 to $10 at 64 which is getting pretty serious.

As for the internal storage of Switch, I imagine that was a cost cutting measure to avoid selling at a loss.  I fully expect that to be adressed with future SKUs.  Could be a hardware refresh with more storage or they do the 3DS thing of packing in SD cards which could be a good solution since they just struck a deal with SanDisk and allows greater flexibility in how fast and how much they expand storage out of the box without touching the actual fabrication process.

And also consider this: if the Game Cards are so crushingly expensive, shouldn't Sonic Forces be more expensive?  It's launching at $40.  At $40, if it is on 32 and 32 is $8 to $9 more than what a PS4 disc is, that means Sega is making literally a couple of bucks per unit sold.  If it is on a 16 gig - probably more accurate - you are still looking at an increase in costs that likely eats up 40% of their profits, you think Sega would just eat that?  Same with the $60 games.  A $5 to $9 increase in costs is eating 25% to 33% of profits.  You think Bethesda would eath that?  Or T2?  Just saying, even setting aside the vagueness of memory costs, there's a logicsl disconnect here.  And none of the scenarios proposed represent a $10 difference in cost to put the game on the shelf.  So the $10 increase in price we've seen seems to be a number chosen purely of habit.

And worth pointing out, LA Noire is the first and to my knowledge only game to do this $10 increase shtick that actually will be on the fabled 32 GB card.  So there's reason to be skeptical of this.  Unless we believe the 32 GB card costs markedly MORE than $10 and the 16 GB costs $10 which would be insane.