Yep, they told me. A couple of the game crazy's around me used to have dreamcast and PS1 games on the racks, and most of them had their full cases. And then when we went to take advantage of the 3 for 15$ all retro games sale, I noticed that all the dreamcast and PS1 games were in drawers behind the counter in plain white CD sleeves.
So I asked if they had the boxes, because of course I'm holding out to buy games for when I can find them complete. And they said they threw them all out because they take up too much space.
Another game crazy had saturn games behind the counter which were complete. I noticed later the same games sitting in plain jewel cases. I don't actually have proof, but I have a feeling that they chucked the entire oversized saturn cases, including the instructions, so that they'd fit on the CD racks easier.
I personally liked the big sega CD and saturn boxes. They had personality, and the chance for some nice big artwork. At the least,
Now, the only part that really takes up space is the box itself. But the only part of the box that makes it "the box" is actually the paper insert behind the CD holder (that has the "back of the box" pick and the sidebar title). Now, if they were smart and cared about their gamer costomers, they could have taken that back piece out and saved it with the game, so that when we bought it and took it home, we could use our own jewel case to recreate the full boxed CD item.
I'd heard other people on this board talk of placed that would throw away the genesis boxes, because they took up so much room. I don't know any for sure, but I wouldn't put it against some game crazy's to do it. I think it might have been gamestops. There too, if you do chuck the box to save space, at least take the box picture out from behind the plastic, so that the person can have the cover and back art.
Having the full boxes is important from a shopping point of view. Genesis is the only system where I've actually investigated nearly every single game on-line, and know exactly what I want and what every game is. But for the rest of the systems, I just know a few games, and not the rest. Being able to brows the back of the box is a quick way to see whether a game might be something I want or not. After that, I browse the instructions to get a better picture.