Sharp and Sony have jointly developed a new MO (Magneto-Optical) storage disk which is just 50.8mm in diameter (2"), 0.5mm thick and has a storage capacity of 1GB using a red laser (655nm wave length) and 2GB or more using a blue laser (405nm wave length). Up to 4GB could be stored on larger disks. It'd be interesting to see Sony implement this small disk in a digital camera...

Medium Magneto-Optical Disk
Recording Laser pulse + Magnetic field modulation
Diameter of disk 50.8mm (2")
Disk thickness 0.5mm
Laser wavelength 655nm or 405nm
Cartridge size 58 x 54 x 4mm
Cartridge features Shutter & Write protection
File structure UDF standard

Sharp announcement (english):
Sony announcement:
Sharp announcement: