Nothing will replace the paper book imho. Having said that, I'm sure I'll buy one of these anyway :o)
If something were available in about the same size and weight (or lighter), used reflected light instead of a backlight (with backlight optional), and had an easy to use user interface (like flipping pages in a real book), and allowed highlighting and marginalia, then I think a modern version of the e-book COULD replace the paper book...
On the other hand, Nothing looks quite as nice as a bookshelf full of leather bound books...