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Sort of damned if they do damned if they don't though. They could go for a bigger cart but at a greater cost which will get passed on to the consumer.
People I'm sure are already going to moan about Wolfenstein 2 being full priced on Switch, adding on extra costs to that would do it no favours. This is really the only sensible move.
It sucks, but it's not really something any party can avoid. Nintendo could only feasibly use cartridges on a handheld (quicker everyone forgets about UMD the better), but they're expensive. Not much they could do other than offer the cheapest sizable card and offer bigger ones at higher costs. Third parties can only bear the brunt of these limitations and decide what's best for them and the consumer. They could optimise the games further to try and shrink their file sizes down but that just adds more cost and pushes the release of their games further.
These updates suck, but I'd rather deal with the one time inconvenience than have to pay extra for games that are typically already more expensive compared to other versions just from using the cheapest carts.