Ok, so he didn't say that exactly. But Arbaugh believes they're out of fashion with people under 30, and that growing lack of interest means they occupy space that could be better employed. They also add weight that has to be countered somewhere else in the march to meet CAFE regulations, an endeavor with nearly aerospace tolerances anymore.
The CD-less car is just talk at the moment but there's no doubt it's coming. More and more computers are being sold without optical drives, and as it goes in the tech world so it shall go in the car-tech world. If we could just get carmakers to properly integrate connections for other PMPs that can play lossless codes and don't mutilate the music, then we wouldn't mind at all – especially since weight savings is one of the best ways to improve fuel efficiency.