this is actually a pretty interesting idea. I think 1 GB storage would be extremely useful for next-gen portable gaming.
Jollus, there wouldn't be a need for a memory card, at least not in the way you describe. Since this would be a portable device, you could take it with you anywhere. That eliminates the need for removable memory cards. So, the memory would really just be built into the system, much like a Palm. Now, as for memory expansion, that would be just one of the many cool accessories this thing could have.
StRaNgE, that would be a bad idea. You do not want to merge the portable gaming and console gaming industries. If the next Gamecube was directly compatible with the next Game Boy, 2-D gaming as we know it would disappear. That, in my opinion, would be a bad move.
Mingesium, it's not like this thing would be released anytime this year. And besides, Nokia's N-Gage is going to be causing so much ruckus, that I think Tokerev and his friend should wait until the N-Gage hype dies down before working on this idea of their's. So, price is not an issue, for this device would not be released for some time. In fact, it'd have to wait 'til the next Gamecube is out, which is probably going to be another 3 or 4 years.