Julia is talking about the Google Book Search system, which allows you to search within digitised copies of books. As an author I've though about this, and to some degree the technical field is the one most at risk. After all, technical and reference books are ones that need the search most, and ones whose readership is probably most tech savvy. Someone at a conference once said to Alex "I'd quite happily pay $60 for a book if it had the one piece of information in it I need", and I think many people would. I've been in that situation myself, where an expensive book saved the day because it contained the right piece of information at the time I needed it. The cost was worth it. Would free searching within books negate this sort of buying? Possibly, but I doubt it would actually have much impact.
Part of the appeal of books is their tactile nature. You can site them on your desk and flick through through them. You can easily flip backwards and forwards between different sections. Ebooks, while a useful search tool, don't provide the degree of comfort that a weighty tome does. Sure they weigh less, and you may find the information you need, but think of how much you might learn as you read through a book? I definitely think there's space for both, even with the same book - the carbon based version to flick through, and the virtual version to search and copy code snippets from.
On the fiction front I just can't see this as being a problem. Like Julia, I read almost every night before turning the light out, and I only read fiction at this time. Never tech books. It's my time to escape. I can't ever see a time when I'd like to replace a nice friendly paperback, with a cold hard device, however cool.
[Listening to: The Wanton Song - Led Zeppelin - Physical Graffiti Disc 2]