I recently saw a technology called v-pit grooving that was researched in Japan. By making data pits cone-shaped (V shaped from the side, thus called v-pit) you can store 10 times the data in the same space. So one DVD can get a whopping ~40GB stored in it.
The problem is, that technology requires a specific reader add-on or a new drive. I personally wasn't too excited about that news because quad-layer Blu-ray discs (100GB) can be read on current production BD players (including the PS3) without any add-ons - a firmware update in the worst case. But nobody really found the need for such size storage yet, or its cost outdo the merit.
If I'm gonna put an add-on or a new drive anyway, I'd rather go with hexa-layer BD (200GB as in 6 layers of 33GB) at this point. That's 8 times the size of single layered BD. And I think it offers more bang for the buck compared to V-pit DVDs having 9 times the size of single layered DVDs.
175GB size increase vs 35GB size increase? Somebody really didn't want to pay license to Sony, or had DVD fetish chose 35 over 175.
And by the laser myth do you mean people saying laser will burn out?
I think that comes from PS2's gear wearing and slightly dismantling the laser arm that causes disc read errors. Sony totally got rid of that gear, so this time you might be able to actually see PS3's laser burning out. If a PS3's been reading BD 24/7 since its launch, you can expect to see its laser out burning out sometime in 2010. Assuming the laser has "average" life-time.