We are a multi-reader family. Personally,I have newspapers that I read on my Sony Reader (via RSS recipes,using Calibre and Feedbooks)-the others keep intending to figure out how to do it (and I keep saying I will help)-but that hasn't happened yet.I would guess that I read most newspapers online-with the exception of the New York Times,on the weekends,which still have delivered-gave up the weekday subscription a while ago,finding that I was reading most of the articles online the evening before.Same with with WSJ (but still have online subscription ). During the week,read the free daily papers they pass out at the subway,he buys the NYP.If I had to guess,I would say I read 80% of newspapers online (taking into account the four or five newspapers I regularly read,some of the local tabloids (NYP,NYDN),some trade magazines/papers ) and about 20% printed-and I am including my reader reading in my online figure.
I do still prefer the printed page-I get tired of reading on my computer screen.I find reading on my reader to be a good midway point-I will probably do that more as time goes by.Additionally-the one thing I do miss most,is how you can "stumble" onto articles when you're physically reading-a little harder to do when reading a paper online,and even to some extent on the reader.
Maybe via partnerships (like Hearsts planned digital reader) and when prices come down,we will see more people reading papers on ereaders. Recently I met a Kindle owner on the subway-the one thing he DID grumble about,was despite loving his Kindle ,and how easy it was to buy books,and get papers delivered-was grousing about his WSJ subscription-apparently he had to get a separate one,and he wasn't pleased about that.For me personally,I don't mind "tinkering",so the process of getting the papers onto my reader is a little bit more fun with my gadget

,but I know that others are not so inclined (prime example the other readers in my household ! )