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On the wider issue, I don't know what will happen but a couple of things occur to me.
First, display technology will evolve. A lot of discussion right now is around eink vs lcd, ereaders vs tablets. And there have been various attempts at colour eink that haven't really taken off. I think when they finally get something like that right it'll be used across the board and separate ereaders will disappear because they're no longer needed. In other words I think the future is tablets but the displays will be much better.
Second, I'm wary of extrapolating from things like movies and music - even though it's the natural thing to do. The way MP3s replaced CDs which replaced Vinyl, and DVDs replaced VHS so easily was because they were an easier way to get to the contents and use it. There's a significant amount of people who like books as books, as objects. I think they're a much bigger proportion of book buyers than the vinyl lovers, and as for movies - I don't know anyone who likes VHS tapes as desirable objects. The closest equivalent would be people who would only want to see movies in a theatre but not also on DVD/TV. Now I still think the number of people I'm talking about is a minority but they are big book buyers (though often second hand), so I think they'll slow the takeover of digital considerably and affect exactly what proportion paper books eventually settles at.
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