While I do prefer a hard copy of games at this point, I'm not exactly against downloadable copies of games under the right conditions.
What I would honestly prefer is for all systems to have large enough storage space to accommodate a wealth of downloadable content (the PSP Go! would barely/not have enough space to hold my current PSP game collection, and I don't even need to mention the Wii do I?).
The prices of downloadable games also need to be comparable with 'sale' prices (read: cheap) for current physical copies of games. There also needs to be some sort of buyback/return system in place where say, you have 14 days from your downloadable purchase date to sell back your rights to play said downloaded game for half the price you spent on it.
Or failing that, free demos available for every downloadable game so you can make sure you're getting something you want before you make a purchase you can't return.
We're not quite there yet though. So for now, I tend to purchase downloadable content if it is something I am considerably interested in, is not very expensive (like $10-15 max, not including add-on content for it), and only if there is no physical copy available for it.
If it's a release with both a physical copy and downloadable, then the only way I would purchase the downloadable copy of the game is if the price was much lower than the physical copy, again, like $15 difference or more. Unfortunately, this is very rarely the case.
To make up for not having an actual physical copy I can put on my shelves, take with me to play over at friends' houses to play on their systems or let them borrow the game, etc., I have to really feel like I'm getting something I want for a good deal and getting my money's worth.
That said, I am a pretty big sucker for buying the re-releases of games I may have missed the first time, or my (increasingly rare and expensive) favorites when I feel I am getting my money's worth. FFVII that I can play on PS3 and PSP for $9.99? Yes please.
