Do the customer's cost/benefit analysis (Score 1)

Ask yourself whether the cost to the customer outways the additional price the customer must pay. In most cases, this boils down to two factors-- the type of manual and the type of user.

Is the manual designed as a tutorial? If so, most users will want to read only small sections at a time to glean one particular bit of information and will only want to do so a few times at most. This type of search is made much easier by the search facilities of electronic docs, particularly since users are unlikely to know exactly what they're looking for. Assuming you would sell a paperless package for less than a package containing printed manuals, it certainly looks to be in the customer's interest to forgo the manual.

Is the manual designed to be a reference? If so, most readers will consult rather broader sections many times. They'll want the ability to annotate, which is still best done on paper. They'll want the ability to peruse the docs for long periods of time, so that image quality becomes important. The cost of printed manuals is less important in this case because a well-done manual will allow the customer to avoid buying a 3rd party reference. In this case, it seems clearly in the customer's best interest to ship printed docs.

Is the software targeted at rank newbies or experienced hackers? Novice users will never open a printed manual and will rarely look at electronic docs. Shipping them printed manuals is generally a waste of paper. Power users are much more likely to crack a book, both because they're accustomed to looking in docs for answers rather than calling the help desk and because they have the necessary context to find the information via the table of contents or index. Power users are more likely to read or browse larger sections of documentation for longer periods, which means that printed docs are more useful.

Are the intended users more likely to be corporate or individuals? Corporate users are likely to have various support options available which they'll use before opening a book-- other workers, IT staff, help desks, etc. (Note that I accept rather than condone this behavior) Shipping them printed docs is pointless. Individuals are likely to have many fewer support options and will thus be more likely to use a printed manual if one is available.

Ask yourself how often the docs will be used and how. Then determine whether printed manuals or electronic documents are better suited to the task. It's unlikely that there's a blanket "correct" answer.