Flash memory is much cheaper and denser than it used to be, and the DS has two cartridge slots as it is. And this one will probably have another just for flash cards if they're really serious about pictures and MP3s.
Graphics don't even begin to figure in. Look at Wii and DS sales vs. everything else. It's how fun the games are to the average person that matters.
For the last few years, it's been more likely that I would buy a DS game than one for anything else, PC and consoles included, because it's more likely to focus on the game play, instead of wasting time with a senseless graphics competition. When it was that way for consoles and PC, the games in general were much better off, and I'm glad they at least still keep that spirit with the Nintendo handhelds, despite the fact that they are capable of full 3D games now.
Now if only they'd make something so that you could play DS games on the Wii. Those dinky things cramp my hands up pretty quick, and yet, plenty of the games have just as much depth to them and multiplayer content as big name console games. I can never really get into them until they address that.