There are 3" DVD discs that could conceivably have been housed in minidisc style cartridges, but it's too late now since the format has become established and will probably dominate home cinema for at least the rest of the decade.*
As far as physical vulnerabilities, VHS has its own since the physical contact causes wear and can transfer dirt and grime between tapes and so on. I think DVDs are much easier to take care of, as long as the owner is prepared to look after them. Unfortunately some people are just irresponsible. I've never had a problem with a scratched DVD, but I buy all my films new.
(* But don't quote me on that. ;-))
