I have a freind that is one of the store managers for game. It's a shame for him as he has a wife and kids to support and unemployment in the UK is showing no signs of falling.
I don't have a problem with the download model for games but it does p155 me off that I can't sell them on. Worse still however are the games that require an online check everytime you play them, fine unless your ISP is down for any reason.
As for cost, I own several games that I have retail packs for that I've paid significantly less than the download price for. Fear gold edition, Galactic civilizations 2, Defcom and Uplink all came from Amazon for about half the price of a download or less. Your also at the mercy of the company in question going tits-up of course. Having said that, it's pretty hard to scratch a download and make it unplayable.
All in all my Galactic Civ game has my favoured approach, retail pack plus download.