Booksurge is great for very niche products. I've bought some stuff that was published with them, that was great, but far, far from mainstream (Neopagan reconstructionism). One can see where a publisher's resources would help (higher rate of spelling errors), but overall, I think self-publishing like that is great for books with a very specific market.
That said, I agree with you that mainstream publishers aren't going anywhere. They do provide valuable services in terms of proofreading, editing and promotion, even if the actual printing aspect is likely to decline in importance.