This is certainly an issue. The problem with newspapers is that it doesn't really matter what you or I think of the rights and wrongs, they're probably going the way of the Dodo. Newspapers have been stuttering for ages, but the WWW is really doing them in. Many of them are openly panicking, and publish fretful pieces regarding their downfall (some of which are wildly off-base, such as the attacks on Google News). The year-on-year profit declines of some of the biggest players are pretty frightening.
One can have an argument about what might replace them, but suffice to say that's all up in the air right now. Big changes are coming, but nobody knows what they might be exactly, because this WWW thing is all so new.
People on slashdot talk about 'free' as a new business model as though its just an evolution of normal technology. It is *not*.
It's impossible to deny the effects a technology has on society, though. A society with a printing press is a different kind of society from one without. A society with cars is a different kind of society from one without. A society with the Internet and the WWW is a different kind of society from one without.
One of the properties of the Internet as it exists now is that everyone pays for the infrastructure, not the actual transmission of data. This is an entirely different way of distributing information than one based on a printing press or broadcasting equipment, where most of the costs are on a central entity doing the distributing. It's not exactly free to communicate over the Internet, just as it's not exactly free to watch commercial television (less so, in fact). The costing just works out differently.
You do get freetards on Slashdot, and I agree that demanding people work without renumeration is not a reasonable proposition. However, the Internet does pose a question as to what will and will not make money with it. Many fashionable websites (naming no names) have yet to come up with a business model, let alone test it. Outside mail-order, tourism and some financial services, few proven moneymaking schemes exist, and the old stalwart "we'll pay with advertising" is looking ever less appetising as the years progress.
As your initial query posed: what about investigative journalism?
This is particularly vexing, as people really do need someone to dig into the issues and find answers, without having to take official sources at face value. There aren't enough journalists who are allowed to do this kind of thing as it is, and one of the more worrisome aspects of the decline of newspaper budgets is that this sort of journalism has been cut back in most organisations. The writers are often overworked and under-resourced, and commonly resort to official press releases, or the Internet, as sources of news and information. This can result in the unnerving experience of reading two different newspapers and many of the stories reading almost word-for-word, because they were both cribbed from the same press release.
I don't have any answers, I don't think anyone does. Blogs are certainly not it. Some of them are excellent in their own way, but none have the resources to really dig into a story beyond what's already been published, in the general case. I also doubt the inclination is there to change. The next few decades are going to be filled with doubts like these about a wide range of issues connected to the Internet.