Full Disclosure: I work for a small publisher.
In terms of actual stores dedicated to selling books, there are fewer and fewer of them as time goes by. And it's not just the small guys, Borders got taken out too. To be clear, there's an economic argument to be made that this is a good thing but let's at least be clear about one thing: Amazon has a very real monopoly on print and electronic books.
While publishers will come and go over time the idea that authors will publish their own books shows a lack of experience actually dealing with real authors. Sure, some have the talent, desire, and resources to do so. However, that vast majority of authors we deal with do not want to prepare their books for market and then have to deal with retailers. Further, publishers are partially in the business of risk taking by offering up payment upfront to authors for works they haven't completed yet. Authors tend to be comforted knowing that they'll get $X now for signing the contracts and $Y later when they deliver the manuscript regardless of actually making a single sale. Again, some authors are willing to take that risk and it will pay off but not many.
So sure, Amazon could take on those roles but that doesn't just magically remove teat suckers. Unless you want unedited and un-styled walls of text someone's going to have to edit the damn thing and someone with an eye for a design needs to make it look half-way appealing. Those people aren't likely to do so for free. I'm sure Amazon could come into the market though and push those costs down and economically that'd be great. However, speaking long term, how long is that going to last? If Amazon has a monopoly on publishing in addition to distribution then what makes you think they'll continue with razor-thin margins?