In addition to the other points, there are other issues besides just cramming a raw number of bytes into a raw amount of space. You need to balance disk space

In addition to the other points, there are other issues besides just cramming a raw number of bytes into a raw amount of space. You need to balance disk space with IO capacity with compute with memory. Simply replacing all of the 3.5" drives with an equivalent volume of SSDs probably leaves you well under-balanced on the memory/compute side and way overbalanced on the IO side. In addition, you need to develop hardware to interface with way more drives per chassis (massive-scale expanders). There'd be a lot of engineering costs associated with getting that much denser in terms of the number of drives per U (figure 6 or 8 times as many per U). Of course, this could pay off if there was a cost benefit to denser servers, but, datacenter space at their scale is primarily priced at a function of how much (and what quality) power you need. Being denser isn't ultimately going save them much if any money.