Lol! My husband keeps telling me he's not going to replace my Sony after I drop it in the tub. I always have it in there! :)
Anyways, to answer your question, Carrie, I think, yes, probably eventually, but not for awhile. There are still a lot of people out there that like the real thing, but I say give it another 10-15 years, and the next generation of kids won't really know much else - at least from a teenager/adult prespective.
I LOVE my Sony - I love that I have a ton of books at my fingertips. I take it everywhere - I'll pull it out while I'm in line at the store even. I still have my huge collection of actual books that I probably won't ever get rid of, but, truth be told, they have mostly sat untouched in the past year. I've even downloaded digital copies of actual books I own to reread, so I guess that says something.
I'm guessing by the time my 4 year old gets to middle/high school he will have his own reader of some kind to read school books on, and that will be the "norm" for at least middle-upper class schools.