I have come to realize that physical bitcoins are really just a novelty.
I disagree. I think there are a number of advantages to storing a private key physically and storing or exchanging that, provided a certain level of trust is present (or unnecessary.)
I just think that enough tools exist for people to do most of this on their own. Paper is a great medium, and slightly sturdier materials can be used at home as well. I just don't see that anything much tougher is needed, unless the selling point goes beyond just having the key in physical form.
Casascius found that attaching keys to durable tokens have enough of a market demand, probably for the "neat" factor as well as storage durability and aesthetic appeal (those gold-plated 100-btc bars are
nice!) to make his products worth it.
You just have to find what little niche beyond "it's in physical form" would work for you.