I think I'll carry my last post a bit further. As far as pop music is concerned, I suspect that downloads will rule the roost. Their limitations--mediocre sound quality, and lack of notes or artwork--don't seem to be chasing too many away, and, if you're only interested in today's big hit, they're cheaper than anything else.
    For classical music, and big band jazz and such, sound quality is more important, and CDs will be around for a long time. For folk, with its more specialized and limited appeal, I think the future is in CD-Rs; as far as I can tell, there doesn't seem to be a durability problem anymore (and more stable dyes are rapidly becoming available), and while they're no cheaper than pressed CDs if you're making a thousand or so, they make initial cash outlay and inventory a hell of a lot simpler.And they sound exacly the same as pressed CDs.
      I know of at least three reputable labels, in both the UK and the US, who are selling quality CD-Rs, and making no bones about it (No, Ralphie, I'm not talking about Celtic Music). This type of small-run production is making it feasible to distribute some fine music that would otherwise be financially impossible.