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I think the services side of publishing can actually provide value. Not all authors are good editors of their own work. A good editor can really polish a book. They can't necessarily fix a bad one but they can make a really good one something great.
Publishing houses also serve as a filtering mechanism. There's a lot of bad writing out there. Sure, some good writing gets overlooked by the publishers and some bad stuff makes it through, but they also keep a lot of really horrible writing from clogging up the bookshelves. When they have a book they think will sell, they invest some time and money into publicizing it with the idea that they make it back through selling the book. If everybody self published and had to handle their own publicity, we'd have a handful of great books that would hopefully be able to generate enough buzz for us to hear about and a whole lot of crap and spam on any community that enjoyed reading. Filtering through bad music is a lot faster than filtering through bad books. You could have something like reddit for books, but that would take a lot of time and effort on the part of the participants.
Still, I see the publishing houses giving way to smaller professional services companies and the authors having more control and compensation if we can find a way for them to get compensated. I'd like to think that folks would voluntarily pay the authors directly if they liked a book. I know I would. I don't know if that's a common sentiment, though.
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