All full nodes still need to process everyone else's transactions, so bandwidth requirements are still hefty, just not squared. Even if someone's home connection can theoretically maintain 45k tx/s, how many of those generous full node maintainers out there will be excited about the prospect of their Bitcoin node using their entire internet connection? Storage requirements will also still be fairly intensive, even if nodes prune everything but the UTXO set (that needs to be stored in RAM--although that can change--it's a half gig).
Not to mention that proposal can create problems where miners withhold transactions from other miners so they can build secret chains that other miners can't build on until they have see the withheld transactions.
All that aside, your comment still ignores the reality of the situation. The Bitcoin network has been bleeding nodes for ages, and has settled around 6500-7000, probably a little more[1]. What that says to me is that even if Gavin's 20MB block proposal works for him on paper and on his VPS, the reality is that we can barely maintain a healthy node landscape with the current stresses of the network. Upping it to 20MB will likely cause a "shedding" and we will come to the new normal, so on and so forth, until we increase the block size so much that we end up with only a handful of nodes.
This is all assuming the network continues grows to those needs, which I found doubtful.