My city (I live in a state capital) just demolished one of our older main branches to build one easily 3 times larger. The library is used a lot (you could not usually find an empty space in the lot on Saturdays, had to park a block from the building) by high school students from the north side of town (tend to be poorer, probably don't have as much access to technology, etc.), so I would say from anecdotal evidence that libraries still do have a large role to play in education, if nothing else.
My own kids love checking out books to read from their school library, and they both tend to get fiction and non-fiction alike, despite having the entire WWW (not to mention game consoles and handhelds) at their disposal. Again, this is just what I have witnessed personally, but libraries do seem to still be valued by many in the population despite all the alternatives.