My friend makes hand drawn cassettes to sell to people. Reasoning is that the artifact is a piece of art, not just an archive of recorded music. Kind of similar to how people like vinyl because you can do better artwork on the larger surface. This friend does lo-fi noise rock, so sound quality of the cassettes is secondary to presentation.
As far as typical bands go, I still like to buy CDs to see the artwork to get a glimpse of the musician beyond the songs, and I like to look at it while I'm listening. I think the cardboard fold-out CD packages are the best because they have the most printable surface and they're eco-friendly.
It's nice to give CDs out at shows too. Better than saying, check my myspace. I'm going to start bringing a laptop to shows and tell people to bring their mp3s and I'll let you download our songs from the laptop for a buck!
