This is only a matter of time. Ten years seems a good estimate as any.
From the publisher/developer's point of view, there are only positives- increased profits due to cutting out the middlemen retailers, less piracy, less material costs, etc. I would think transportation costs of shipping discs outweighs bandwith costs, so even in delivery they would save money. With the right business model, they can even cut out the videogame rental business.
From the consumer's point of view, I think it's less clear, but it still has its positives: no need to worry about keeping discs safe, no need to step foot into retail game stores, no need to keep gigantic storage space to keep an ever-increasing collection of games (my main problem these days), no need to worry about defective/fraudulent purchases, etc.
There are some negatives I can think of as a consumer, but most of them I think stems from the fact that we're just not used to digital delivery of goods. I like to have a physical disc/manual/case as much as anyone (and in pristine condition), but really, I can see that they are unnecessary- just some resistance from my collector mentality. Also, not everybody has broadband, and until broadband penetration reaches close to 100%, digital delivery probably won't work.
The one, HUGE negative I can think of is that with digital delivery there will be no clearance games. No more $5-10 clearance sales from TRU or Circuit City or wherever else. Just MSRP set by the publisher. For this reason alone, I would hate to see digital delivery take off to the exclusion of traditional retail sales, but I think it will happen sooner than later. Game developers (why would an independent developer even need EA with a well-established infrastructure of digital delivery) have too much money to gain.