Libraries have so many values (and need to cdhange SO much!) I fully agree about the introduction to reading (or more importantly selecting) that libraries offer - the suplimentary aspect to formal education at all levels is avital community service.
Access to reading is key. I really don't care about format in this respect. If people either cannot afford paper books or cannot afford the entrance fee to electronic reading - this social service should NEVER go away ... and this is a physical access issue.
Libraries as an archive? - Certainly in electronic land this is a sort of oxymoron - when the format is infinately distributable - the duplication of too many repositories becomes redundant (enough to avoid the Alexandria syndrome, sure, but the need beyond "back up" for both physical and electronic is a waste - I'd rather see investment in access!)
Physical libraries is quite a limited debate - what about the role of librarians themselves in future libraries - ontologist/taxonomists? educators? agitators? Can they really compete with search algorthms? e-learning? altruistic(?!!) companies such as Google?