I don't think the install time is really an issue that will deter console gamers - I think I'd prefer to sit there installing DMC4 on my PS3 for 20 minutes to cut loading times. There's definitely been games that would have benefitted from being installed or at least caching data on a consoles hard drive (Mass Effect is a pretty obvious one - sadly Microsoft's persistence in marketing to the casual gaming market means most games are going to be built on the possibility that someone without a hard drive will play them due to the Core/Arcade SKUs but hopefully they'll give up on this and let more publishers start slapping "HDD required" stickers on their packaging).
The only thing that bothers me is that installing content onto hard drives eats HD space - DMC4 for instance is 5 gigs, which may seem like a drop in the ocean to a 40 or 80 gig PS3 hard drive, but imagine if I had to do it on my 360? I only have 10 gigs of space left, having not yet upgraded to a 120 gig (something I will be doing fairly soon, I imagine).
I think the main inconvenience here is that if we start seeing games that have 5 gig installs, we're going to max out our hard drives in anywhere from 2-10 games, which means deleting installed content to free up space for other installed content. Granted you can switch out hard drives fairly easily on both the PS3 and 360, but I'd really rather not have to.