My pbooks and ebooks co-exist quite happily in my home
Several years ago (and before I got an ereader) I did a massive cull on the pbooks which were absolutely everywhere and kept about 800 or thereabouts, everything else got sold/given away. I then allocated them a "limited" and defined space - so floor to ceiling bookcases in my corridor and that's it (there's room for about 1400 pbooks). I still buy some, mostly when what I want isn't available in ebook format, and I always get given pbooks for Xmas and birthday.
Like others though, if I ever come into large amounts of money, I'll get a bigger place just so that I can have a "proper" library