"The younger folk I know all seem to buy CDs still (as well as downloading).
In fact, my own kids and most of their friends still buy a lot of stuff on vinyl. I'd say 25-30% of the new music that comes into our household is on vinyl...and it's mostly not me acquiring it.
They use iPods, of course, for evryday "background" but when listening seriously they use vinyl or CD, as do most of their friends"

Your kids and their friends aren't typical, according to the sales figures. Assuming sales figures continue on their current trajectory, CDs will constitute less than 50% of music sales within 4 or 5 years, and will have gone the way of the cassette within a decade.

Of course, there is probably a point at which the decline of CD sales will plateau (at least until all the people who grew up buying CDs have died). Equally, while vinyl sales are going up, it's from a miniscule floor to a very very low ceiling (when compared to downloads, paid-for or otherwise).