True I dont know how much cartridges cost to produce but I'm sure they cant compete with the ability to stamp out game discs at under $1 a piece. But on the other hand there is no greater piracy deterrent than the cartridge.
Yeah, especially since those CDs could hold 650MB and it was feasible to package multiple discs together even. The N64 cartridges topped out at 64MB, which hurt music, video, and textures especially hard. To add insult to injury, Nintendo wouldn't budge on licensing fees (practically couldn't since they had very slim margins on the cartridges in the first place). But yeah piracy was low, although I don't think piracy was nearly as well developed on the consoles back then. I mean, look at the DS, it uses cartridges but that hasn't done anything to limit piracy. Cost is definitely still the primary factor.
I think it will be interesting to see what they do with the next systems. I see Sony sticking with Blu-Ray. I think DVD will continue, just because I don't see digital only distribution quite ready for consumers, but I think we'll see a push toward it. Ideally, I think at least 2GB of DDR5 paired with 8+GB of onboard flash (with a fast low latency bus) would be great so that they could load a lot of the game very quickly. Have some larger, much cheaper solution for storage. Or maybe just let you save and stream everything off your computers/devices/memory cards (please Microsoft, just go with SD cards...)/external drive. Probably dreaming, but we can hope.