This is true, but the way you wrote it ignores the fundamental problem - it's not we can't make transistors switch any quicker, it's that doing so causes such an increase in temperature that we risk damaging the device. That's why you can read about overclockers using things like liquid nitrogen to run chips at 8 GHz.
Cooling mechanisms like microchannel cold plates and, as we continue with 3D-ICs, interlayer cooling, can allow for higher frequencies.
Gate delays are smaller at low temperatures; those LN2 overclocking runs aren't just fast because of efficient heat dissipation from the CPU, they're fast because the chip is being actively cooled to below room temperature.
So while heat dissipation is a factor, we're also close to the electrical limits as well. Otherwise water cooling (replacing the stock heat spreader) would get closer to LN2 runs. ALUs run at higher frequencies than the rest of the chip, but they're designed to do so (you'd have to shorten the gate pathways like a P4 to do that to the entire chip).
But ultimately, performance per watt is almost universally optimised for these days. It's critical in servers, laptops, mobile phones - The demand for 6ghz, 300W CPUs would be limited to workstation chips, even though we could probably engineer them to be reliable.
Power consumption is always going to increase super linearly with respect to frequency, probably as a fundamental property of any method of computation we use.
If each layer was 50 nm high, and you built the chip up to an unrealistic 1 centimeter high (eg, a 1 cm^3 chip instead of 1 cm^2), chosen because that would pretty easily fill a 2.5" drive, that would give you:
(1 centimeter) / (50 nanometers) = 200,000 times today's capacity.
Which is only only 18 doublings, or 36 years more of Moore's Law (assuming the pessimistic 24 month end), or roughly the gap between a Commodore 64 and a decent laptop today. Some people still working in the industry have gone through a larger increase. I've gone through a 1000 fold myself, and I'm only 25.
There are sure to be a whole bunch more we can do to get more capacity, but it's pretty mind blowing to think that the theoretical limits to storage are within our lifetimes on an exponential scale. So as much as Moore's law hasn't failed us yet, it certainly will at some point (probably in the form of the doublings themselves exponentially taking longer and longer).
And given that nature has managed to cram this amazing sentient device into a space the size of our skull, using a pretty inefficient design process, I'd say the problem will be not the quantity of the building blocks, but how they're organized :)
That's actually considered to be a feature. http://en.wikipedia.org/wiki/Hyperthymesia
I believe though that limit is well below 18 nm. Last I heard, they'd done a transistor with 1.5nm, and they weren't saying that was the limit. I'm not sure what the magic is with 18nm, but I'd sure like to know.
The concerns in the past have been mainly to do with lithography; eg, when the feature size of the silicon went below the wavelength of the light we were using, we had to make masks that utilized difference patterns. This is a mere manufacturing problem.
But now we're getting to fundamental limits. Even if we had the ability to place the atoms however we wanted them, there's an intrinsic limit. You can't make a transistor out of half an atom.
We already hit a wall with frequency; for the longest time, it looked like speeds would go up and up. It's not an apples to apples comparison, because the Pentium 4 had a long pipeline, but a 3.8ghz Prescott was released in 2005 - which is exactly the maximum turbo frequency of the 2011 Sandy Bridge 2600k I'm typing this now on. Ivy has it beaten by just 100mhz.
Now, that's not to say that computation will stop progressing. But it's not going to look like last year's CPU just smaller for much longer; some pretty fundamental changes are going to have to be made. Dynamically reconfiguring memristor circuits are what excites me, but it's just as likely to be something else instead.
As far as flash memory in particular goes, I'm no expert, but cell durability is falling substantially with each shrink (on average; Intel bucked the trend with their 25nm flash), and so the usable limit to feature size may come more quickly than with standard transistors.
But the industry has managed to push through walls that seemed just as intrinsic before, so I wouldn't bet my life savings on it.