Once money is removed from the equation, it's obvious that the only reason most people work is for the money. So, yes, most people will retreat into the holodeck, never to be seen again. How is that different from what they do today? They're wage slaves for eight hours, and then they go home to consume media for the rest of the day.
The best benefit from all that, in my mind, is that we'll no longer have crappy doctors (or engineers or waitresses or movie directors) who just got into it for the money. The only people working jobs will be the ones who really love driving trucks (or playing baseball or making furniture), and the no-love, no-talent losers will *get out of the way* and clear the field for those with a calling.