I say no way. Games are getting bigger and bigger, and when you consider PS3 versions can almost double in size because of of the true HD bluray video, they can jump over the 12gb hurdle pretty easy. This is not something that can be easily replaced with net downloads and SD cards which can still run over 20 bucks for a 16gb version.
Kiosk sound like a nice idea but it is very hard to replace the easy to handle disc media.