Why Downloadable Content Is Bad:
Not so "new and shiny": Gamers are a fickle lot, and have a long established way of looking at games. Once you have "completed" a game, it loses some of its appeal. Sure, there may be more songs to play, but if you've beaten career mode, you often feel like it's time to move on. Gaming habits are hard to break.
DLC is not very portable: Taking your DLC with you can be a pain in the neck. Many factors have to be considered: moving gamertags, internet connections, the hard drive or memory card itself, etc. When a friend calls and asks you to bring the latest disc, it's grab and go, but if you have DLC you'll often not even bother.
Achievement envy: This one's for the cheevo chumps. Disc based games offer lots of chances for new achievements and trophies. That has not been the case for DLC in music games so far. I wonder why this is, since DLC packs add to achievements in many other games.
It's yours forever: Once you buy DLC, it's always yours, with no refunds or returns. There's no selling it, or trading it in. Not a deal breaker, for sure, but it is worth considering. Thankfully, with music games, you know exactly what you are getting with your DLC in the first place. (I'm bitter I can't Ebay away my bad decision to buy Pokemon Ranch for the Wii.)
Technical issues: DLC takes up space, obviously. If you don't have a hard drive, you are pretty much out of luck. Even if you do have a hard drive, the space fills up quickly. Also out of luck are those without an internet connection. Disc based content solves both of these problems.
When I started thinking about these issues, I always felt that DLC would come out the winner in a landslide. It's hard to argue with no disc swapping and cheap prices, when I can pick what I want. However, the appeal of the extra features of disc based content, plus the inherent monetary value of physical media, is compelling as well. In the final analysis, I still think DLC comes out on top, but I believe the real winner here is the music game consumer.
Competition always leads to innovation. Guitar Hero and Rock Band are both solid franchises, and each have made improvements to the basic formula over time, leading to a very highly polished experience for gamers. It seems like when one series has a good idea, the other implements it too. GH World Tour used the 4 player band mode of Rock Band, and the Beatles Rock Band takes a page from GH Aerosmith and Metallica. Guitar Hero 5 promises backwards compatibility with previous DLC, copying what was easily the greatest feature of Rock Band 2. Harmonix has released much of its DLC in Track Pack disc form, similar to the GH releases.
Perhaps the best solution of all would be to give players the choice. Why choose disc or DLC, when you can have it both ways? Consider the following, an idealized scenario. DLC would be released every week, and disc based compilations of the same songs would be released at nearly the same time. If you want just a few songs, grab them at $2 a pop, or, if there's a lot of good stuff you like, spring for the whole disc, which would be priced at a bulk rate discount. Core game revisions would still be released on disc. Why stop there, though, when you can take it a step farther? Give gamers the option to export songs from any music game disc to the hard drive, and make those songs, and any other DLC compatible with all future revisions to the core game platform. As with the Six Million Dollar Man, the technology is here to do this, and it would rebuild the music game genre into something truly great.