I'd also like to add a few anecdotes from my own experiences with game downloads...
I've downloaded quite a few games in the past few years, and sometimes the prices can be ridiculously cheap. Www.direct2drive.com had a sale on all Sims products a few months ago, and I picked up a bunch of expansions for The Sims 2 for $11 each. I also got World Adventures there for $12. I've also bought other games for as little as $3-7 (and these games would have cost $20-30, respectively, if I had bought disc versions in my local store).
I have a slow internet connection, so some of the games I've bought have taken a long time to download (3-5 days). It doesn't really bother me though, it's not like I have to sit at the PC watching it download.

Usually game developers try to offset the download time by allowing people to start downloading the content for new games before the official release date. So when release day arrives, it'll be on your PC already, ready to play.
The limitations on downloads and number of installs vary depending on which service or product it is. Some downloads are simply a single file, and once downloaded, the file can be copied onto a disc, or installed as many times as you want. So as long as you keep that file, you can re-install the game quickly and easily.
Personally, I miss the days when PC games came in huge, extravagant boxes. But those days ended about a decade ago. Since then, packaging has been getting more and more minimal, so it won't seem like that big of a loss when it disappears completely.
And I'd also like to point out, on the last two computers I've owned, the CD drive has been one of the first parts of the computer to stop working. So...having a game on a disc may not be as convenient or dependable as players think it is.
