I think the industry, namely developers, need to look at what's achievable. Because of the new methods of distribution, it's much easier to get something out there without going through console licensing issues and such.
What I mean is that, not everyone should be trying to make a big-budget £40 console game. You see so many games fall by the wayside because of over-stretching themselves. I think Double Fine may be heading in the right direction (although, you could argue their new downloadable games are a little overpriced). This being: seize upon a simple idea and make the most of it; don't let it overstay its welcome. And that's what most cheap games are: a pure and simple premise. It's what Tetris is (the game that made the Game Boy such a hit). I'm not even saying it has to be a cheap portable game, even something like Earth Defence Force 2017 fits the bill.
Finally, of course you need big-budget games. There's not a single person here, who wouldn't want them. The quality and complexity of the work is not cheap. I understand why some are quite expensive, but not all of them need to be so expensive.