Recently I had decided that I needed to move from buying CDs to downloading music, be it from the artists website, Bandcamp or i-tunes. As much as it saves space, I am missing the impact a physical book gives me, and the role it plays in enhancing the listening experience by including the lyrics to each song, sometimes the stories behind each song, and the artists 'thank yous' and messages often help you connect with the artists.
I know digital booklets are included with some CDs, but its a little bit less accessible.
I do expect, however, that changes are coming here. I've recently seen lyrics embedded within MP3s. Maybe in the future we'll see albums as apps (including additional content, like videos, perhaps in the ability to link into live shows). Not all of these would work as you listen on the i-pod, but I certainly like having the lyrics available on the i-pod for some CDs.
I'm sure someone is thinking these things through, and perhaps they are also thinking along the lines of what would make people more inclined to buy a physical CD.