P&S cameras will always sell well because of their size and weight.
If I put my Canon IXUS130 next to my D90 I often wonder if I am mad using a DSLR at all - lugging about a huge, heavy DSLR when I could slip the P&S unnoticed into my shirt pocket!
Plus, for simple "memory-record" pictures, outside, in good light, there's little difference in their capabilities. But beyond that a DSLR kills a P&S stone dead.
I'm waiting to see what happens with EVIL cameras. Will they be a success - quality as good as a DSLR, but size more akin to a P&S? Best of both worlds? Or will they be a flop - too big to be pocketable, but never quite as capable as a 'proper' DSLR? Worst of both worlds?