I think this is probably down the road several years until flash memory is such that they can make and sell a 1 gig USB drive for a few cents. CD's are still the cheapest physical media they can distribute programs on. The internet is still way to slow and not wide spread enough, especially here in the US. The US is only 230 million or so people spread out over a huge area vs say China or Japan with 5x the population in an area the size of a few states. The cost to deploy in the US is many times higher and the fact there is not one carrier/network provider it slows everything down even more.
The internet will eventually be the distribution channel of choice but even then I see the CD hanging around at least another 10 years while SSD's become pennies per gig vs a few dollars a gig now. They may even be super cheap in 3 or 4 years but until the SSD drive is common place in every laptop, I see the CD/DVD drive hanging out. Look at the VHS technology... you can still buy VHS tapes 10+ years after it was considered dead. I think the CD has a long life ahead of it for many reasons listed here and some we haven't even thought of.
Reading back over some of the other comments it's also pretty clear until the technology to stream "HD/BlueRay" feeds is possible with the huge bandwidth it requires, DVD's won't be going anywhere anytime soon. When we see Netflix going broke because they are losing customers to streaming providers, that will signal the end is around the corner

While I wish this was a few years away, I'm afraid were a good 10 years+ away from sitting at home or frankly even wirelessly with a 300mb to 1gb downstream internet connection. Widespread to anyone that wants it at a reasonably cheap price.