Nice idea, and I've thought about it before; but I doubt it will happen in the "big" consoles. Flash memory is just so darn expensive compared to optical, we're talking hundreds of dollars for a flash card large enough to hold a game vs. less than a dollar for optical media that can do the same job. It will therefore be several years (I'm thinking at least five) before it is cheap enough to mass produce as game cartridges that they can sell at current game price points. By then, I predict that at least one of these two things will happen:
1. This is almost a guarantee: Game sizes will increase even more, which would require even larger flash memory; and flash cards that big will still be expensive. Remember, five years from now we should be in or gearing up for the next generation of consoles (i.e. whatever comes after the X360, PS3 and Revolution.)
2. This will also definitely happen, although maybe not in five years: There will be no hardcopies of games sold. Once XBox Live and its ilk has taken over the mindsets of gamers, and broadband is in every household, the packaged software distribution model will evaporate. It's already happening in the PC arena with Steam; you know that Microsoft is looking at that model and going "Hmm, we could make X more dollars if we cut out the middleman like Vale did."
Now where I do think flash memory could work is in the PSP/GameBoy form factor. Especially the PSP, because UMDs are slow, sucky, crap media.