The cartridge argument doesn't hold up because of the development costs of many of the top tier games. Factor in the technical talent required to make a game, the variety of artists and modelers needed, and often the cost of big name voice talent and licensed or original music. Game development budgets are pretty huge now, and I don't see any indication that they're dropping any time soon.
That said, raising prices is not a smart move. Gaming is a bigger industry now than it has ever been. Why extort from the larger audience? Try to hold prices or even better, drop the average cost of a new release to $39. Help make the audience bigger still. Help the next generation of consoles get traction by making the initial costs a little more reasonable. Especially with the unwelcome trend of not even including a game with console until much further down the road.
Here's what I'd like to see: $60-$70 for a AAA special edition package (normal $40 version still offered), $40 new releases, greatest hits for $15-$20.
I'm not expecting games to cost the same as DVDs or CDs given the fractured nature of the market. As long as there are 3 consoles fighting it out each generation, I don't expect prices to get much lower.
Oh and if EA thinks they can gouge customers for $60 per year for the latest season of its sports titles, they can rot for all I care.