Kyle Baxter, commenting on Seth Godin’s post on Tablets nails it about what publishers should become:

The second point is what I think publishers themselves need to become—curators in the sense that they collect great writing and make it available. The web means there is always more supply than we can handle, so what we need is groups that can sift through the muck and find the people worth reading. Instead of publishers being merely the people who provide printing and distribution, completely irrelevant to the end-user, they should become someone whose taste we trust.

That’s a much harder game but it also would have huge benefits for publishers and users.