Whenever companies go ahead and try to "re-invent the wheel" I can't help but laugh. Why would go and do you own proprietary thing when the market has spoken and said that CDs/DVDs/BRs are the way to go. Cheap to manufacture, proven technology, plenty of space, lightweight. Honestly some of the stuff you listed OP as Pro's I just don't feel they are very good.
Less shelf space - Most racks at stores are universal, and made for full size disks.
Speed - As far as I know most games already cache a lot of their data to the console. Not gaining much here.
Faster switching of games - non issue. Then you have to take into account that the metal connectors in the cartridges are metal and rust, get dirty, etc.
I'm not going to respond to all your points, but basically my argument is that it's a lot of hassle for not much gain. As a consumer, I don't want more expensive media. And like many others have mentioned, the market is moving to digital media. I'm already there with Steam. I want my games to be decoupled from the hardware, and be able to run on any system I own. If console manufacturers don't want to be open then fine, but at least let me play your old games in newer systems free of charge.