Thumbdrives are undoubtably a great bit of technology, but unfortunately, as per this topic, they are highly impractical for mass distribution of software. As far as cheap, practical storage goes, the DVD is simply poised to completely replace the CD in the very near future. DVDRs and DVDRWs, of both the + and - variety, are dropping drastically in price (< 25 cents each is not unheard of on particularly good sales), and burners are at the sub $100 range; a very, very familiar situation to those of you who remember when CD burners became affordable.
In short, yes, barring some major and unlikely change, CDs will go the way of the floppy disc.