Jeff - yes, welcome to 2004, but hasn't this always been the case? For the mass consumer market 10 years ago there was the point-and-shoot, auto-everything 35mm compacts and APS. All that's changed here is the medium. I was also outside Buckingham Palace recently and saw what you refer to - yes, the majority of peolple were shooting digital, which really brought home the revolution to me. But, there's nothing wrong with that, for average snapper the end product is (almost) the same.
Us Apug people are slowly being squeezed out - serious enough about photography not to use consumer digital for convenience, but not professional enough to need digital for its high speed and commercial advantages.
I expect there will still be film in the future - just look at the CD/Vinyl analogy cliche. The choice of what you can buy on vinyl has reduced, but the hard-core market is still there. The likes of Kodak Gold or whatever will eventually disappear, no great loss, but unfortunately some people's favourite b&w film will enevitably fall by the wayside. Sad but true, but we must adapt and survive.