There are a lot of compelling advantages for a console using a SSD type drive.
On the console side:
It will lower the fixed costs immensely over the lifetime of the console. If you have an Arcade type SKU and you can do without both a HDD and an optical drive, you could save up to $50 per unit over the lifetime of the console, and it absolves the need to use a memory card to save the games as well.
The console manufacturer can package the console easier, and infact they could easily use the console itself inside other consumer electronic devices such as TVs as there are no moving parts to break down and no optical drive to position on the machine.
On the development side:
Faster data throughput is obviously going to be a big plus as well as not having to deal with optical drive latencies. Also they will know that every SKU can be treated pretty much identically.
Data quantities available can scale easily with process generations, with the transister count doubling ever 2 years they could expect 4x the space will become available at the same price within a generation.
On the consumer side:
It will make the console quiet, dealing with a Blu Ray drive spinning at 6x speeds isn't going to sound very pretty as wel've seen from the Xbox 360. HDD installs aren't going to be as easy to manage with data densities as they are and install times getting longer.
The drives themselves are practically indestructable compared to the disc based media. No more scratches or fingerprint marks on discs will be a plus.
Lowering the initial purchase price of a console by making it simpler is going to be a plus for consumers. Also a lot of people hate things breaking down, so making the console far more reliable will be a big plus for some people.
On the Down side:
Expense! How much will one of these drives cost if you want to get the required data densities? Granted, by 2011,2012 we will have likely moved onto the 32nm process at least, so couldn't it be expected that the cost of the flash will be 3-4* lower than it is currently? The actual expense of the disks isn't a problem because publishers pay the console owner fee per disc produced and get a refund on unsold stock, so obviously the disks could easily be reused again if they aren't sold.