Diskettes will be dead when any boot diskette can be emulated via optical and/or USB boot. Until then, we may still need them, and will have to rely on USB diskette drives for modern PCs.

Few things reveal XP's age more than the ridiculous "F6 diskette" process that is required to integrate boot-time drivers, unless this process can be slipstreamed into a new boot CD.

Forget the "waste of space" issue! Look instead at cost of your boot device, which is lower for CDRs and CDRWs, and may become low enough for flash drives and write-protectable SD cards irrespective of capacity.

If the code layer that emulates the boot diskette (which typically appears as a fake and diskette-sized A: drive after boot) also allows other diskette images and bootable environments to be selected from a menu at boot time, then this makes USB storage devices cheaper than a collection of diskettes.

USB storage, CDRs, DVDRs, CDRWs and even DVDRWs (in that order) are more reliable than diskettes in my experience, and don't care about magnetism and airport security.