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As transactions keep coming in, disk space on each peer is bound to get filled up, because each peer needs to have a complete copy of the blockchain. Is there a way to horizontally scale each peer for disk space? rather than vertically scaling it (getting a larger disk)?

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To my knowledge this does not exist and most probably is not even planned at this stage. Two things are to note.

1.) The size of the blockchain is determined by a number of factors - it does not have to be Bitcoin-sized!

2.) In many Blockchain use cases, not all nodes "need" to store every block since the first (genesis) one.   think it is reasonable to assume that Hyperledger can be modified to support various pruning strategies. To the best of my knowledge, however, it does not do this as of now.

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