Publishers have a similar role to record companies. Somebody else creates the product, they edit the product, but mostly they are just the marketing firm. Why should they be getting a bulk of the profits?
Publishers ARE evil, but they do more than being middlemen.
Even good writers need good editors. Look at the complaints on Slashdot summaries...the issue is poor editing, and that's a skill different from being a good writer. Editing is more than correcting spelling mistakes/grammar. On many occasions a book becomes much more enjoyable when a good editor spends time and energy on the manuscript.
Fringe benefits like an advance on an upcoming book. Even if they take the rights perpetually, and the advance is too low, an advance is important.
The books they reject may not be worth much even they got published. Look at the all the books in Amazon...a majority of books are worthless, they were made/published only because they could be published. For every example of a good book being rejected by publishers there are hundreds of examples of a bad book being rightly rejected.
A writers job is to write. In the world of Amazon he/she will have to wear different hats...the marketing person, the editor (or find the editor), do the cheer leading to make his/her work standout etc. I have no idea how a real talent can emerge out of this madness.
But the world will adapt and evolve and my fears are misplaced. For every publisher who closes shop, there will be people announcing their skills for a fee. In the end a new publishing order will appear, which is probably going to be the old itself, but working on smaller margins.