Bradfordian, I agree that there's no real substitute for a physical CD (or vinyl album, for that matter).    But there's also an important place for music that's stored in much more compact ways, e.g., on a hard drive or online or on a flash drive or iPod.   As small as CDs are, they still take up space, and it's much easier to take several hundred (orseveral thousand) songs with you on your iPod when you travel than it is to take a comparable number in any "hard copy" form.
I would never suggest not having the CDs & "jewel cases" - and I hope CDs never really go away, just as vinyl hasn't - but I still like the option of buying these "albums" as digital downloads too.