Remember when Street Fighter 2 cost $70? Ever notice the price disparity between the PSX and DC games vs. the N64 games? Disk based media allowed for cheap games, and after a period, rediculously cheap games (WOO HOO! Eternal Darkness for $15!). Scratches are the downside to it, but the upsides are that games can offer greater visual details and longer games for cheaper (more entertainment for less $=good thing). For portables, I still like the solid state because of the movement and abuse they take, but for home you gotta give the nod to disk based media since the abuse they will take is a bit lower and the gains outweight the risks big time.
The ONLY way I've lost disks because of scratching is when a CD binder put pock marks on almost all of my CDs. I put them in there to protect it, and now I have a MS VC++ 5 Pro disk that is unreadable and many CDs that are so badly scratched, that those disk resurfacing tools you can buy at game stores and office supply stores cannot get rid of them all. (even with two passes) Caseit=sucks.