Um ... I can not for the life of me wrap my brain around the notion that a game designer somehow gains some higher level of creative ability based solely on lower size limitation of the game media.

Last time I checked, regardless of how large a game cartridge, disc or downloadable file is there is no requirement that a game fill some percentage of that space.

If a game developer wanted to release a game that only takes up 35KB of space on a Blu-Ray disc where a 50GB Blu-Ray is the proprietary format of the system that the game is developed for ... why would that be a problem?

Sure, at that size, the game would probably make for a better downloadable title, but this romanticized concept that games are "better" (or more creatively developed) because they're on a 100KB cartridge isn't much different than saying that music sounded better on 8-Tracks or that food tastes better when its home-cooked. (And yes, I'm well aware that there are people who will argue such things to their graves ... but it still doesn't change the fact that it's ultimately nothing more than a romanticized attachment to a specific media/delivery type.)

Good games are developed by good developers, size limitations of any given storage media are only that - limitations. A good game designer can easily transcend any limitation be that too little space or too much, which I suppose is being perceived here as some sort of limitation.

I don't believe that having near-unlimited resources in terms of space makes any difference when it comes to good games. If a designer wants to make a minimalist product nothing is stopping them.

But, to your address question, interesting to note, Sony's NGP is ditching the UMD and will be releasing games at brick&mortar on Memory Sticks.