You're comparing a higher-DPI screen to your impressions of older-DPI screens. Obviously it'll look better. You don't get disruptive developments in technology by merely making the new better than the old though. As long as it isn't hitting/exceeding
print resolutions, all it'll be is a higher-resolution screen. Get it to 300+DPI, or even 600DPI though, and suddenly it becomes a real contender for paper replacement. You'll be able to display incredibly fine drawings (not just illustrations; CAD renders, architectural sketches, text prints, etc) without having to print them out.
Of course, there're other issues to work out, such as the backlight (which makes long periods of screen reading uncomfortable), but getting DPI that high would put it one step closer. Will it ever
completely replace paper? Probably not, but it could eliminate many uses of paper, and I see that as a good thing. An example: in design work destined for print, one would often have to make many print drafts before the final product. Screen previews don't work because of insufficient DPI; look at how fonts look on screen, then compare it to the actual fine printout. You never know how the actual text layout, word spacing etc is going to look until you have a physical printout; this results in much paper wastage on draft printing (these drafts are pretty much discarded after use).
With a 600DPI screen we will be able to preview printouts directly and have them match the actual printout much more closely. Print wastage will be greatly eliminated. Well, this is the workflow of a design studio; how is it relevant to the average Joe's usage? Let's hit a little closer to home: academic journals (I'm sure there're enough academics here). Ideal reading conditions stipulate a font size of at least 16pt, with 12pt as an acceptable compromise (note that the
typographical point is a
physical measurement corresponding to approximately 0.0139 inch or 0.3528 mm. 12pt on your desktop/laptop is seldom
actually 12pt physically.) Those in science/engineering should be well aware that the typical journal page cannot accommodate a couple of graphs together with the corresponding textual information on a single page at such type sizes; the result is that journals often have much smaller type sizes, around 10pt or so. Likewise with newspapers. These can still be comfortably read, just not for very long periods of time (measured in hours). The same practices are found in journals in other fields as well, such as the humanities and social sciences.
I have tried reading journal PDFs on a 1024×768 12" screen before (tablet PC, circa 2006), and it was a real stretch. Font glyphs were distorted so much I had to strain my eyes to recognise words. It is readable, but not in a visually enjoyable manner. Doubling the resolution would help, but still wouldn't bring it anywhere near the print quality I get from a printout. And that's where I'd like to see tablet screens at. Maybe they can't replace books entirely, or high-quality postcard prints etc, but I'd love to be able to push articles, reports and journals to a tablet for reading. That is going to require a >300DPI screen. And as much as some of us dislike Apple, they are going to be the first to bring it to market, because they give a shit about it while other manufacturers don't. Someone has to whip their ass or pull them by the nose, and Apple's going to do just that.