DVD's are becoming pointless, seems no matter how recent the game is, you have to download a gigabyte sized patch for it before you can play (maybe exagerating a bit, but look at WoW, HL2...).
EA will make damn good money from this, once they've paid the development costs it's pretty much 100% profit, a bit like Valve's Steam system I suppose, but it means we get free games, EA get funds and eco-friendly kudo's, and it's paid for by companies that would usually be more interested in spamming our email accounts. Seems like a win win situation for now.
I think they'll probably have a pay system for things like weapon upgrades though, I think that's what they mean by micro-transactions - like you might be able to buy better weapons. Imagine a cruddy sniper rifle as a default, with a fisher price scope selotaped to it, but for just $5 you can have an SVD or something.