Read the fine title
Rodrigo y Gabriela belong to the sphere of virtuostic rock music where the personality of the instrument (and playing) is much more pronounced. This makes them an exception. Most of the songs on X-Factor/Idol could be played back instrumentally, using synthesised instruments, and most of the audience couldn't tell.
I do think the need for live instrumental musicians will never disappear. This is the whole point of a concert, to get worse sound quality in exchange for direct communication with the artist*. If the artist is just pushing the play button that disappears. Further, many people enjoy the expression of playing an instrument themselves, and they will always want to hear others do the same.
* Or the hype of a crowd, so maybe DJs will prove me to be wrong.