Long ago we called them CD Caddys.
Few reasons why they aren't used much:
- As has been mentioned, the cost of a CD/DvD would be much greater if you had to enclose each one inside the caddy. CDs/DVDs fly off presses like hotcakes. Just look at the cost of floppy disks, different media I know but much much cheaper to buy a CDR than a floppy these days.
- It is a lot easier to store a bunch of CDs than it is to store a bunch of cartriges. I haul about 100 CDs/DvDs with me when I go somewhere (never know when you're gonna need 'em.

) They fit in their handy dandy case and don't weigh a lot, pretty easy to tote. If they were all cartriges it'd be a bit more bulky. I guess that would depend mostly on the cartrige design, but the old CD caddys were pretty bulky. Either way, its easier to store them as disks.
- CDs and DVDs protected by a cartrige wouldn't create that neato rainbow effect when you hold them in the light just right, and that would make the world sad.