The wear problem was overcome just before the project was cancelled.
The vertical-to-horizontal feeding system idea in the G11 (which I thought was the most unique idea of the whole system) managed to survive the cancellation and appears in the current FN P90.
Caseless ammo is fired electrically. Current firearms fire rounds using a mechanical strike on the primer. Changing caseless ammo to be fired by a mechanical pin strike might make it impact sensitive and therefore a bad idea.
Also, a mechanical primer would almost certainly be made of metal, and as such would not be consumed and have to be ejected somehow. The whole purpose of the G11 was that since it didn't have to eject brass, it could cycle much faster for three shot bursts. Electric priming is the only alternative that gets completely comsumed in the burning process.
The P90 does not have a rotary bolt. It does carry the magazine parallel to the barrel as did the G11, but it is a simple blowback bolt design. From World Guns:
The P90 is a blowback operated, selective fire weapon. It is fed from 50-rounds box magazines, made from transluscent polymer. The magazine is being located above the barrel, with the cartridges being aligned at 90 degrees to the barrel axis. Each magazine has built-in ramp that rotates cartridge to align it with the barrel prior to chambering it.
Notice how the cartridge is oriented on the spare magazine, in the middle of the circular end. (The P90 is a Bulpup design.)
Developed for the Hill submachinegun of circa 1959. Originally in .38 Special, as I recall....