I apologise whole-heartedly for reviving this ancient thread, but it was linked in a more recent one and seemed too open-ended for me to ignore.
Firstly, drives like the Wii's are already very common, mainly used in car CD players. Secondly, discs the size of the GC's are a standard CD format (called a mini CD), hence the little inset in tray-loading disc drives.
I have a drive like the Wii's on my old PC, and it sucks in and plays those small driver CDs that come with mainy PC peripherals these days perfectly. The alignment mechanism feels like it consists of a spring loaded wheel on a hinge either end of the slot, so no matter what size and whatever part of the slot you put a mini CD in, it gets pushed into the center as it is sucked in by the rest of the mechanism.