The problem I have with arguments that say "online will become dominant in everything" is that they forget that the market still determines what succeeds and that not everyone prefers to do things online. 

Take this quote from Fred Wilson...

This downturn will be marked in history as the time where many of the business models built in the industrial era finally collapsed as a result of being undermined by the information age. Its creative destruction at work. It's painful and many jobs will be lost permanently. But let's also remember that its inevitable and we can't fight it. Technology and information forces are unstoppable and they will reshape the world as we know it regardless of whether or not we want them to.

Before I even start let me be clear about one thing.  Brick and Mortar sales are shrinking, online sales are increasing and I have no doubt that trend will continue for some time.  Because there is still a certain percentage of people who are uncomfortable with financial transactions online and as that number dwindles more people will find they enjoy the online experience. 

But we don't know how many people that will be which is an important distinction.  In this case, as with anything else in life, perspective is key.

To get some perspective I'm going to present two examples.  I've picked these examples because I believe most people are aware of the online channel's existence even if they don't use it.

For the first example, lets look at book sales.  I usually like to gather my own statistics but Morris Rosenthal made it so easy I'm just going to quote his chart (check out the page quoted for more info)...

Company North American Sales (Books, Media plus cofee, etc:-)
Barnes&Noble / B. Dalton1 $4.68 billion
Borders / Waldenbooks $3.41 billion (excludes international)
Amazon Media (excludes electronics, services - books, includes books, music, DVDs) $4.63 billion (2006 was the first year Amazon outsold Borders in North America)
BN.com $477 million (also used to promote stores)
Total $13.20 billion

So in 2007 (the year of the figures used above) brick and mortar book stores actually outsold Amazon.  By a fairly significant margin no less.  Now you can't tell me there were many book buyers who were completely unaware of Amazon's existence in 2007.  So this is the result of people choosing brick and mortar over online.

Next lets look at another example...online banking.  Take this quote (Courtesy of Bnet)...

Research and Markets (http://www.researchandmarkets.com/reports/c38186) has announced the addition of the eMarketer report: Online Banking: Remote Channels, Remote Relationships? to their offering.

Expanded broadband penetration, familiarity with the Internet and the increasing number of younger and minority households are boosting the growth of online banking. By 2010, the number of online banking households in the US will grow to 56.2 million, or 62% of total online households in the US.

Note that they say "percentage of total online households".  In fact, according to the U.S. census bureau there will be an estimated 114 million households in the U.S. meaning that even in 2010 online banking won't have reached 50% penetration. 

Now again, online banking has been one of the most widely marketed features of all time.  It represents a huge windfall for banks because a server costing about $10,000 a year can replace three $40,000 a year workers.  So banks have marketed online banking like nothing before.

Yet there are still only about 50% of the world taking the bait.

That's my point.  There are people out there who like buying their books in a store and doing their banking in an actual bank.  The only reason Fred Wilson can believe his statement that the destruction of non-online business models is inevitable is because he's locked into the perspective that everyone is like him.  But they aren't. 

The questions of online's dominance will be answered by finding out how many people prefer that method of shopping, banking, whatever.  Not some fated inevitability. 

Oh, and btw, it's not an age thing.  Ask a group of teenage girls whether they'd like to buy their clothes at the mall or online and see what answer you get.  Heck, ask a group of middle aged women and you may very well get the same answer.  Some people like the experience of shopping and that isn't going to change.