I think the problem with plastic grocery bags is that they're very lightweight and can be picked up by the wind and deposited all over the place, notably including waterways, where marine life can mistake them for jellyfish and try to eat them. Similar issues exist with other lightweight plastics, like styrofoam.

I don't think I've ever heard of anyone complaining in particular about grocery bags taking up too much space. I think there is a general concern with the overuse of disposable goods, especially non-biodegradable ones, and grocery bags are certainly part of that.

As far as newspapers go, I don't think we'll have much problem with newspapers much longer.