Surprised at people not seeing this eventually happening. Apple's been reducing its packaging more and more every year. My OS X boxes up until Tiger had big retail boxes. Then when Leopard came out, it was magically smaller. And Snow Leopard had an even smaller thinner box the size of the DVD and as thick as an iPod touch. Even their computer boxes have shrunk. My 2007 MacBook box is 6 inches larger and slightly thicker than my 2010 MacBook Pro box.
I think the smartest thing would be to offer both downloads and USB stick based installers. And the USB stick's would come in the smallest packaging you can get. About as big as a gift card and with a small amount of plastic holding it on. Can't get much smaller than that without just throwing the stick at the buyer.
The only problem with USB stick installers is eventually instead of having a bunch of scratched DVD's lying around, you'll have a bunch of much more easily lost USB sticks. Unless you keep them all on a keychain, in which case you'll eventually need a 5" Janitor's ring to hold them all. "Which one is it? No, not that one.. no.. nooo... hmm, no... ah.. no, that's not it..."
Though they could be smart and colorize each piece of Apple software differently. Grey for OS X, Yellow for maybe iLife, Red for iWork, blue for something else, purple.... So you could tell at a glance. And when a new version comes out, they could have a program to recycle them. Or you could just keep them. Whatever.
At the very least, I want OS X on USB sticks as a retail option this Summer. I don't want another disc.