That's nowhere near as ridiculous as $10 for an 8MB Nintendo 64 cartridge vs. less than a dollar for a 650MB PlayStation disc.
The DS seems to be quite profitable using cards, which are a sort of cartridge, so I see no reason why a home system can't either. And the size of DS cards has increased considerably since its launch, which would indicate the costs for them has come down. So by the time Nintendo launches their next system, 8GB cards would be plenty cheap enough for the system, and they serve consumer needs better than optical media.