You're ignoring one of the most important jobs of newspapers: investigative reporting. While blogs and news aggregators like Digg and Slashdot do provide a useful service, they don't generate much news. Digg and slashdot primarily link to traditional news sources and would be bereft of content were such organizations to disappear. For an example of the importance of this role, just look at the past few years. If it were not for the investigations carried out by major newspapers (in particular the NY Times and the Washington Post) we would not know about the NSA wiretaps, the Guantanamo abuses, or the role of the Bush Administration in falsifying pre-war intellegence, just to name a few.
In order for a democracy to truly function, a strong, independent press is necessary (look at Russia for a "democracy" where this element is missing). It's hard to see blogs and TV news stations taking over that role from newspapers any time soon.
"The Amiga computer was a dream given form — an inexpensive, fast, flexible multimedia computer that could do virtually anything. It handled graphics, sound, and video as easily as other computers of its time manipulated plain text. It was easily ten years ahead of its time. It was everything its designers imagined it could be, except for one crucial problem: the world was essentially unaware of its existence.
The moon is made of green cheese. -- John Heywood