Flash memory, or something similar, seems to be the logical step up from the CD. The problem with flash is the production. Right now, the packaging for a CD is more expensive than the CD itself, even for small runs. Stamping out CDs is very fast and very cheap. Flash memory can't be stamped; they must be written and flash is very slow in writing. Additionally, flash memory is only relatively cheap in very large memory sizes. I don't know if anyone even produces small (CD memory size) flash chips anymore. Maybe for older cameras.
The technology will always be way ahead of the ability of the recording industry to maintain huge profits from the medium.
Water? No. But peanut butter seems reasonable.