Not really, you are restricting yourself by the artificial CD size
You don't have to use the full size of whatever bigger medium you
choose (DVD, 1 or 2GB stick) but you are currently providing a poorer
user experience because you insist on a medium from the last century.
If every live image gets larger, that will also negatively affect the nice
Multi Desktop Live DVDs the Ambassadors are now mass-producing. Those
contain all our live CDs (all desktops in both 32-bit and 64-bit versions,
where the bitness is autodetected at boot, but can be manually overridden)
on one DVD, which is a great thing to hand out at events.
We really shouldn't bloat our images just because we can.
Downloading debugging information (and complete debugging information!) on
demand is really the best solution. Or use the retrace server if you'd
rather have a web service do the work for you.