In my opinion we will live paperless. And sooner than later.
When I state this, I’m always met by skeptik looks, and it’s normal. We live in a society (specially we in academia) surrounded by paper. Myself I’ve grown up in a house full of books, and I love reading, buying, searhing for books. Why then do I think this?
1. E-ink technology

One important thing to mention is that until recently reading digital material was much less comfortable than paper. Reading a novel in a screen is just painful, the concentration span is shorter, a headache probable. This is the argument most people have against electronic books.
I use this e-ink device above, the sony reader 505. It uses a reflective display without light, works wonderfully under direct sunlight (actually work best under direct sunlight). I have used it for reading many books under the last year, and after the first pages you just forget that it’s not a normal book.
This devices as the new sony reader 700, the amazon kindle, the different readers from iRex, and more to come are the first towards making the act of reading in a screen as comfortable or more than a book.
2. Everything that can be dematerialized, it will be dematerialized.

Going digital is full of advantages, no weight, no need of physical space, easy to search and index, easy and cheap to produce, easy to scale up and provide to millions of users at the same time. Just in the tiny memory card of my reader with its couple of gigabytes there are space for probably more books than I could ever read in my life, everything packed in a thing that is smaller than a pocket book.
A fast calculation: A book the size of any Harry Potter is around 400kb (in the sony e-reader format .lrb), if I read 100 books per year during 100 years (I hope for improved longevity..), the total size of those books is around 4.000.000kb ≈ 4gb. I can buy that for my reader for less than 25€ in a memory card that is just 5 × 12.5 × 1.2 mm, the size of a fingernail.

Yes, that size, that price, compare that with 10.000 books the size of Harry Potter. (Not even talking about the environmental gains).
Let’s see other examples of things that can be dematerialized and that have already been:
Music.I think that editorials should be aware not to follow the discography example, following a business model based on the scarcity of a physical objects when those objects have been dematerialized. The change in music consumption just talks for itself, the change from collecting cds, to downloading mp3s and using ipods, to just listening to Last.fm or Spottify. Unavoidable.
Other example, when I was working as a DJ I collected vynils, I loved the feeling of the turntables. Until Final Scratch arrived, connecting the turntables to a laptop, same feeling with virtual music, that was probably the last time I bought a vynil. Once a technology has that unquantificable thing that I call “feeling”, plus the benefits of being digital, it’s over for the analogic equivalent.
Pictures. The change from film cameras to digital ones and the explosion in photography amateurism. I still use a SLR film camera, I love its analog feeling, but I develop only to digital copies and upload them to my Flickr.
Movies. Movie theater to DVD to DivX to streaming. Same pattern, same results.
3. Pattern recognition:
We have seen that it happened before, are books really that special? Well, yes. Books are a wonderful technology. A great way of transmitting content, and more advantages in its selfcontinement than a vynil or a DVD. But seeing the pattern followed by music, films, pictures, and some trends as the rise of new e-ink readers, traditional book companies as penguin starting to sell their titles electronically, amazon putting so much energy in ther kindle and people loving it, the success of mobile novels in japan, the increase in traditional books bought online, the boom of blogs as a source of news, the new generations of digital natives, the use of laptops as the OLPC (with its high-contrast reading mode) creating some million of new digital natives… All those trends point somewhere towards a change in the way we create, distribute and consume text information.
Of course point out that there are some trends against this hypothesis, as the rise of publish on demand and cheap online publishing as blurb.com and lulu.com
4. Linking the nodes
Ok, we have seen how dematerialization has work in other areas and different trends in electronic reading. From this and from my personal experience, my conclusion is that when the new digital technologies with all their benefits reach the feeling of their analogue predecesor, in this case e-ink displays making reading as comfortable as a normal book, the days for the analogic technology are counted. E-ink and new display technologies are the turning point, and paper will decline. I do not know if we will use specialized devices or if mobiles and tablet pcs will get screens that are as good for reading as the current e-ink or better (just see the olpc2 concept). The paper as we know it will dissapear, it will take a while, but in my opinion it’s unavoidable.