For one thing, energy density needs to improvement by an order of magnitude to make mass application useful, and the average lifetime of the battery I would say would have to increase 2-3x. Batteries are expensive to manufacture and the ecological impact of disposal is also extremely high - better to make longer-lasting batteries than cheap crap.
"Lithium Ion batteries are classified by the federal government as non-hazardous waste and are safe for disposal in the normal municipal waste stream," says Kate Krebs at the National Recycling Coalition. http://bit.ly/wS344
In general, throwing away stuff that isn't naturally occuring in the eco system is often bad, and sometimes too much of something natural can be bad too. But blanket statements that something is bad don't help. The battery system would be replacing something else, like a petrol driven engine, which also has an environmental impact and is much less efficient.