Two perspectives - when I went to Iceland last year, there were many more independent bookshops than I have seen in any other city. There were also loads of craft shops selling wool, threads and materials for making things, knitting, crochet. I think the long, cold, dark winter nights make reading and these kind of hobbies more popular there. I don't think the fall in book sales has much to do with e-books but rather the laziness that wants our entertainment to be faster, quicker, and on-demand. The cinema is doing incredibly well, DVD sales and games sales are phenomenal. Books are hard work.
Second, are e-books cheaper? Not in my experience. If you want a new book by a published author, if you want a text book for a college course, then they are the same price as in print. You have to go second hand to something like Abebooks to get it cheap. Only self-published authors, very old books and special offers are cheap. As a new medium, it makes sense that they will offer incentives to get you to try the new format. Once the industry matures then the prices will equalize. There will always be someone who wants to read a real book, just as there are still people reading broad-sheet Newspapers. My wife complains that she never sees the front cover of her Kindle books when she opens them, so she sometimes forgets the author and title.
They probably said the same thing about the end of books during the rise of magazines. There were certainly complaints that everyone had their heads in their magazines and no longer talked on public transport, which is the common complaint about smartphones and Kindles on public transport. I doubt that anyone ever made much conversation on public transport with strangers.