We cannot neglect the masses who like the feel of a paperback, who will read it on the airplane, on the bus, or on the pot.
On the technical book side, I have continued to see a market for people who want their own hardcopy of SICP, TAOCP, Feynman's physics books, and other greats.
I read paperbacks a lot, too, but I'm going off of data from selling 3 fairly successful technical books. eBook sales are huge.
Having a paperback is a huge win, but it's often not worth the effort to futz with editing it (inserting page breaks properly etc.), typesetting it, finding a proper publisher, and messing with the whole process of getting the whole thing setup. Lulu makes it easier than nearly any other solution I've looked at, even if their margins are high (their margins aren't but their production costs are; authors balk at them but they're usually absorbed by publishers so while it seems that you're getting screwed, it's just that you're taking on the risk now instead of the publisher).
Maybe not very. I can say that I see plenty of people with ebook readers on the bus, subway, and commuter rail. 'Course, I work in Cambridge (MA), which I'm sure skews things.
On the technical book side, I have continued to see a market for people who want their own hardcopy of SICP, TAOCP, Feynman's physics books, and other greats.