Or new compression technology and not using cgi cutscenes, which MS and devs has already talked about.
The main thing that kills space on discs are the CGI cutscenes, but MS and Devs have said that there is no need for cgi since they can now make cutscenes in realtime using the games engine (look at Gears of War, Dark Sector, Prey, Oblivion, Kameo, Amped 3, etc).
Some games will still have cutscenes, like Japanese RPG's and games which are on platforms which require cgi cutscenes (current gen consoles), so those minority of games will just get closer to the maximum space on the disc. Some Japanese Rpg's will exceed the max space on a dvd, not necesarily because of the size of the game, but because of the hd cutscenes. They will have 2 discs to run from, which many rpg gamers are used to (Ie. Insert cutscene disc).