Time will really come when USB flash drives will flood the CDs and the DVDs out of the market, but it won't be any time soon, as they still have a lot of advantages over the flash drive.
For one, flash drives are still expensive compared to CDs and DVDs! Yes, in the long run of using both storage devices, flash drives will still come out cheaper because they are reusable and portable, unlike CDs and DVDs, that can be easily disposed of. However, there are certain cases when CDs and DVDs are more affordable to have, especially for those cases when you have to distribute data permanently among many people. Just imagine distributing some 2GB document to your friends in flash drives. That would be much more expensive than if you distributed the document in multiple CDs or DVDs.
I also know people who still use CDs and DVDs primarily because they find these storage devices prettier than flash drives. They even get one of those laser CD/DVD labels to make eye-catching labels for their CDs and DVDs. It's a matter of preference, I know. Flash drives come in different designs nowadays. The possibilities are even greater than with CDs/DVDs.
In time, the use of CDs and DVDs will go down and down, but I am pretty sure that they will still find their specific use in the market, just like how tapes are still widely used today.