I have to admit I use B&N as a showroom because I enjoy going out and perusing the shelves. There's something about walking through the shelves that just calms me. I like grabbing a peppermint hot chocolate and then socializing with my friends/wife/kids as we peruse. My personal trainer (ie wife) also likes the fact that I am away from the computer and getting a little excercise!!
I don't buy anything there, unless it is a hardcover that goes in a set I've been collecting or one of my top-top favorite authors. I prefer eBooks and a pBook has to be very special to earn a spot in my bookshelves!
Plus, sometimes there is a great cover or display that catches my eye and I might pick up a new author... Yes, that is also possible to do in an online catalog - but it is much easier to miss a book when it is a small thumbnail in a list of thousands. There is also something to be said for a large publishing company doing a little filtering of what ends up on the shelves (not much, but something), the books at the store usually have a certain level of quality of content/writing. The publisher has determined that the story is worth investing their time and money.
I can easily see the stores getting smaller - I would hate to see fewer of them - but less square footage is less expensive. If they carry only a few copies of each book, a display copy and a few for those who really want a pBook (at a premium of course), then point people to their "convenient and free wifi" to download the book instantly...I think that would work.