Cheap android phones with decent cameras and expandable storage (microSD).

Edit: I'm obviously oversimplifying, but most of the world doesn't have always-on data connections (e.g. rural areas) and manufacturers outside of silicon valley do optimise for people that may want to download media so the can view/listen when they're not connected. Nothing beats a cheap phone replaceable battery and storage.

I assume it took off instead of USB storage for reasons lost to time.

It's not some great mystery, micro SD cards are tiny, USB storage isn't.