Digital would be pretty darned nice for a portable device. The games would be much more accessible, and you'd be less likely to lose a whole case of them (learn from my mistake people) at once. But the space on the device is limited. 32gb isn't going to take you very far. That said, SDXC cards are fairly cheap, and constantly getting bigger and cheaper. So this may not be much of a factor in the long run.
Physical has the advantage of (probably) not needing to install. PS4 and Xbone games take up tons of space, regardless of whether you go physical or digital, such that a 500gb fridge will be filled up in months, with a 2tb drive not lasting much longer, especially when you have a paid online subscription which comes with monthly digital downloads. And patches eat up waaaay more space. Which brings a few things to mind. First of all, there's a greater onus on the publishers to ship games that are already polished and completed. 15gb Day One patches are not going to fly for many Switch-ers, at least until they get an SDXC card. Also, how about DLC and patches? Can today's big Western third-party games or service games even exist in this type of ecosystem? Perhaps, if they assume that the user will have extra storage. Maybe Overwatch and DOOM could come bundled with memory cards, like Animal Crossing on the Gamecube!
Oops, back on track. At least for Nintendo's games, going physical should allow that 32gb last for quite a while. Also, Nintendo's games (and even games on Nintendo systems) usually hold their value quite well, whether due to demand or limited print runs or whatever. So physical games have a lot more actual value. Particularly since digital versions are usually priced similarly, and are oftentimes even MORE expensive. I might be able to unload my sealed Rayman Legends, grab the Switch version, and pocket some of the change. Mario Kart 8DX seems pricey to some MK8 owners, but trading in your Wii U disc will offset quite a bit of that price.
Another wrinkle is that Nintendo hasn't mentioned the details of their new account system yet. It's possible that, for the first time (without staging a fake robbery), you could leverage one digital copy of a game like Mario Kart 8 across multiple Switch systems. That's big. However, I still can't see Nintendo allowing this. In that scenario, what's to stop people from account-sharing? How does Sony control this? By limiting the installs? Maybe Nintendo could check the geographical proximity? Or only allow it when the systems are in the same room? I dunno. That's another discussion, I guess.
To conclude my stream-of-thought rambling, I plan to go digital for pretty much all of the multiplayer stuff and physical for everything else. For me, convenience trumps value. Convenience and the slickness of being able to throw down in Mario Kart, Smash, Bomberman, etc. at a moment's notice, using only the system in my pocket/bag.
I'll try to last as long as I can and then pick up a 64gb or 128gb card when the fridge starts to overflow. And maybe upgrade it later, when the SDXC cards get cheaper.
I'm still torn about Puyo Puyo Tetris, though. Apparently, only the Switch is getting a physical version, due to licensing issues. That thing is guaranteed to be a collectors' item! Y'know, like Rodea The Sky Soldier!
I had started to go mostly digital last gen, but given the small storage space available in relation to the size of the games and the fact that my gf and I will be sharing many of the games, though some longer ones like Zelda and probably Xenoblade that we'll be playing at the same time we'll get our own copies, I'll probably go mostly physical this time.
It should be noted that, on the 3DS, a 32gb card has lasted me the entire life of the system. Nintendo (and their usual third-party cohorts) usually keep their game sizes reasonably low, when compared to the competition. If the Switch starts getting third-party AAA stuff, though, all bets are off.
Not only will I be going all physical, but I've been considering lately only playing physical games. I feel almost no ownership of digital games, so I may only ever download DLC for games. 32gb should be plenty for me.
If I plan to keep a game forever (Mario Odyssey, Future Animal Crossing Game, etc.) I will buy it digitally. It's just nice to not have to switch discs (in this case, carts, yay!). If I plan to play it once and then not again (Zelda, Fire Emblem Warriors, etc.) I will go physical so I can trade them in for at least a few bucks towards something else.
That is pretty much the go-to reasoning behind my physical/digital choices these days.
Then, for some, I'm torn. Yooka Laylee, for example, could be Banjo-Kazooie Good, and I'd want it forever. Or it could be Donkey Kong 64 Good and I'd trade it in. Hmm.
To add to my earlier answer, if there's a way to manage storage easily, like connecting to my pc by usb and swapping files there or something, or moving files around is easy when/if they add extrnal hdd support, then I'll probably start buying more games digitally.
Physical, for the reasons Paleo_Orca listed, as well as the knowledge that when the digital service is no longer updated, you no longer have access to those games. In ten years, you will be lucky if Nintendo is still hosting those old games for two generations previous. I'm not sure if you can still download Wii games, but that's kinda my point. At least by having the disc, I know they're only going away if I do it myself.
I certainly tend towards physical releases, but I often consider digital for multiplayer. In the end, it's usually whichever is cheaper, and right now 20% off on Amazon will almost always win. If I can trade in Mario Kart 8 for $32.50 and buy it for $48+ tax, deal. $17 for a battle mode expansion is less than I was willing to pay.
Edit: Puzzle games: digital is highly considered for short play sessions between larger stints with Zelda.
I went all digital for a good bit during the 3DS's life and kind of regret it. a lot of the games I have digitally I'm willing to part with but a few of them (Kirby Robobot, Luigi's Mansion, Layton VS. Wright, and Link Between Worlds mainly) I kind of wish I owned physical copies of just to always have them.
I will likely be going almost all physical for this round.
I'm more and more liking having all of my major multi stuff on the console so during multi sessions, where games get switched out frequently, it's less hassle.
Single though, I tend to leave a game in for days / weeks at a time. It's ok to go physical there.
Now, retail used to have a big price advantage, and price is very important to me. But I rarely ever find that good of retail deals nowadays. Blah. So actually, I've jumped all over the place, but my actual answer is: depends a lot on how cheap I can find it each way when I decide to buy it.
I've learned my lesson with WiI U. A multi-player game like Mario Kart or Splatoon, I'll probably want digital. Single player stuff, I'm probably OK with physical. Very happy I got Mario Kart and Smash digitally.
Physical if Nintendo keeps their current policy that the console owns digital downloads and not the the user, digital if Nintendo gets with the times and let's the user own the game ala XBL, PSN, Steam etc.