Flint said:CDs are limited to 16/44.1, period.
What this entire conversation is missing is the fact that for a VERY large percentage of home users, CD players are a thing of the past, as are all disc players. I have very technical friends who at this point no longer own a stand alone disc player of any kind. They get their video entertainment from Cable/Satellite, Amazon, Netflix and iTunes. They get their music entertainment from Amazon or iTunes. They don't bother with hard media anymore.
Just recently a friend of mine, a Q/A lab tech for my employer (a technical junky and genius) said his son got an Audio CD of his favorite band for Christmas and didn't know what to do with it. My friend had to really think about it before he remembered his Xbox could play audio CDs.
While I have no doubt that your sophisticated techie friends are in that category that demographic does not make up "a VERY large number of home users". When I see my friends and family members' home there is always at least one type of disc player there, some don't even realize they can play a CD on their DVD player and have both. Heck even though BD has grown leaps and bounds any of my good friends that have BD players were introduced to the format by me and I believe they still would be using DVD had I not been around. When I asked the local video rental guy why they didn't carry more BD copies of movies he said he wasn't getting the demand to justify more copies, that being in a situation where he claims that after the NF debacle he has seen a 15-20% increase in business. The same thing with streaming media with NF and Amazon. The only place I really see discs declining is in music with iTunes and Amazon offerings.
I'm not trying to revive the BD growth issue - the format has grown leaps and bounds and growing every year but DVD still has a strong portion of the market..
As has been pointed out by others I don't think you always have a hold on what is going on with true average Americans. If you use the people you work with as a barometer you are setting the bar way too high. Most average Americans are not "very technical" or pursue the HT/AV hobby the way we do. And besides being unfamiliar with the technology they can't afford the cost of all the newest thing.
The younger upcoming generations will/have embraced the new technology but there are millions of "older" folks that do not have a clue.
I believe we will eventually get to a mainly "discless" society but we have quite a distance to go before we get to "a VERY large number of households" at that point.