As you may have read, Sony is trumpeting the fact that PS3 game downloads will have a 500mb size restriction, ten times the current limit for XBLA games. This is effectively no different from Sony’s claims that blu-ray makes the PS3 superior to the Xbox 360 in general. More megabytes == higher quality.
IMO, the current success of XBLA (and recent success of the Wii launch) are proof enough that customers care about many things, and foremost among them is fun. Fun isn’t measured in megabytes — just ask any devotee of Geometry Wars or Uno. Development cost and team-size, on the other hand, are very much affected by megabytes… and not positively.
XBLA has helped bring back the four-man console development team. It has helped foster innovation in an industry clamoring for just that. It has helped make development budgets reasonable again. It has kept download times to a minimum. Is anyone really in that much of a hurry to blow the ceiling off the house once again?
Sony’s in a tough spot. They don’t have much going for them right now, so they’re forced to keep touting dubious technological advantages. I wouldn’t be too swayed by those when choosing which platform to support. And for the record, I’ve been making arguments of this nature since long before I joined Microsoft. Just read through my blog’s archives and see for yourself.
If XBLA ever raises the size limit, it will be for the right reasons — not because Sony is pushing an arbitrarily high ceiling.