Switching to DVDs probably just encourages bloat (e.g. GNOME3) when there are plenty of usable alternatives that fit current restrictions.
Automatically switching constraints to fit inside the next largest available media is like buying pants with larger and larger waists as you grow fatter and fatter. Sure, sometimes you need to actually get bigger pants (e.g. during a growth spurt when you're 12) but there comes a time when what you have is going to be good enough for a loooooong time (or at least, should be).
You don't see people yelling at others for wanting to fit in the pants they've been wearing for a while. Why is optical media any different? If your installer and default desktop environment is too big to fit in 700MB of space, then somebody's (or some bodies are) doing it wrong.
It's not just about constraints in resources, it's about the principle: I want my pants to fit forever, and so does Debian.