What about flash cards? Disks are easily damaged, but a solid state memory stick is really quite strong, and there's almost no limit to the storage potential.
In ten years I bet media will be sold on a medium roughly the size of a dvd, but the actual data will be stored on a fingernail sized chip embedded in it. I don't think they will shrink storage medium smaller than UMD, just because people will lose it (I will).
Flash memory isnt dependable. You can only write it *so many times*, the transfer rate is absolute crap for heavy-duty needs and a mini-hard drive is about the same size if you compare price-per-gigabyte/meg.
If tracks on discs continue to get smaller, discs should never be taken out of a loader. (Remember way back when? Some drives required you to keep it in a special case and you put the whole thing into the drive?)
Well besides the thought that one day if a piece of lint gets in the way of a laser, you wont be able to read a few gigs behind it..heh, I wouldnt mind keeping it in a permanent case. A disc the size of an UMD, put it on a keychain and make it dependable rewritable or a portable HD platter.. sure! (provided its in a magnet-proof outer case!)
As for storage, only movies are really pushing the storage boundaries. Games dont really need CG movies with all the processing power, these days. Applications and operating systems can still fit on a single layer DVD with room to spare. (unless you use SuSE, lmao! How many clones of this program/package do you want, today?) All the ultra high quality pictures you could ever want would only take up a DVD or two. Zip 'em and call it a day. HD porn? Like someone said a while ago, it takes a movie production company to get it done right. HD porn is a ways off, and the everyday computer still cant handle half the HD stream through intel integrated graphics or low-end radeon's or GeForces.