Well technically it already does....Floppy disks are good for small files and it's a lot quicker to copy stuff onto it....but it holds only a tiny bit of what CD-RW's do. USB Harddrives would probably replace Floppy disks aswell because there easily portable and hold way more space
But they do cost a lot more....but really it's worth it
Yes but they cant be used forever...CD-RW'S last ages (1000 times before they cant be burnt anymore and thats if you dont get the cd wrecked by that time) you can get cd's scratched easily.
1. Depending on what you do, 1000 might not be that much
2. Studies have shown since then that the reuseability is not that high (even though its not a concern for 99% of people)