It's not digital books that are hurting Barnes and Noble (and previously killed competitor Borders). E-books are a successful sidebar, and will very likely continue to grow. But the biggest threat to brick and mortar stores like B&N are online retailers like Amazon, and not even their Kindle offerings.
That bothers me more than anything else, really. I'm fine with digital books, movies, whatever. I've spent too many hours packing and sorting my dead tree book collection, not to mention finding places to put it all, to mythologize the format itself. But the best books I've ever read, I've found as a result of browsing the aisles at places like Barnes and Noble, and, before them, local retailers. That's an experience Amazon hasn't managed to duplicate, and they're considerably better at trying to do so that 90% of their online peers.