I'm thinking of it more as an option than a replacement for cd's to be honest. 90% of people only seem to listen to music from an Mp3 player these days so i think the idea of just dragging and dropping the files rather than ripping cd's would be good.
Also a cool advantage for bands is that if you're working on a new album and haven't sold all your pensticks from your previous album you can just put new files on it, so you don't need to get cd's printed (depending on how many you have left and how many you need)
Or you could update sticks with your latest songs/demo's/live tracks/photoshoots/whatever when fan's come to your gigs. You could record the gig using desk outputs into a Gemini Ikey and then transfer the file's onto fan's sticks so they have a mp3 of the show they just saw.
Was talking to my guitarist today and he's quite liking the idea of trying it out almost like a fan club type thing. You buy the E.P. on a stick, fans pop it into your pc/mac and pull the files over, then at the next show they come up to you with the stick and you give them some new stuff. I feel it might even encourage people to come to shows.
Obviously not being able to play in a car cd player sucks, but then car stereo's with usb connections seem to be getting more common these days. Plus again, alot of people seem to be using Ipod connections for their car (I know I get sick of changing cd's in the car, hence why I use my MP3 player into the aux these days) and a Ipod dock for their home stereo. So it might not be as big a inconvenience as you think.
Really I think its an interesting idea, and while I don't think it's going to replace cd's it might be a cool extra. Gonna quiz some friends about it and see what they think of it as a concept. I've emailed a company to see about prices, and their minimum order is only 50 units so provided its not extortionate and there's some interest in it I think this could be a cool experiment.