Virtual environments allow for new rules on what can and cannot be done, and how easily.
I made the switch to digital drawing about 5 years ago, and I still can't believe some of the stuff I can do now. Undo alone is a trick that would have made any professional illustrator 20 years ago crap his drawers. Layering adds an outrageous amount of control. Texturing is a whole new art form, it bears practically no relation to what that term would have meant before digital painting became mainstream.
It's no surprise that the same thing is happening with digital reading. Thanks mostly to the internet, the factors are finally in alignment; sufficient saturation of content (the Net) + familiarity with the format (because everyone's gotten used to reading on a screen thanks to the Net) + affordable, effective platforms (kindles, nooks, smartphones, touchpads). It's been projected for decades, but it couldn't work until those factors aligned, and now it's finally happening.
The ability to conduct keyword searches alone places the digital text file over the physical book in terms of practicality. Not to mention that you can just about hold the entire Library of Congress in your back pocket (and that qualifier won't be necessary in another five years).
Physicality will hold more value. Quality of content will probably lessen overall, but when it's good it will likely be very, very good... it'll need to be, in order to survive. It'll cost more to own a real book, but maybe less to own a virtual one.
I'm still waiting for someone to start offering a free e-book with the purchase of a real one. Or at least a discount 2-pack.