I don't think it's dead - yet. There are a number of stores in my area that still stock PC games, albeit in much lower quantities than the console versions (and generally only the biggest of the AAA games, like Call of Duty and Blizzard Entertainment titles). It seems like it's really only a matter of time though until online purchases are required for physical copies.
That said, I like both, but for different reasons. Any game that I really want, I like to have a physical copy of. These are typically the games that I'm willing to make a Day-1 purchase (or buy a collector's edition), where the price is going to be pretty much the same no matter where I buy it, physical or digital.
For everything else I tend to prefer digital these days. I don't have a data cap with my ISP, and digital games are great for filling the time between those games that I really want. The prices tend to be quite good, especially during sales, and I don't even have to put on pants to buy them like I would with a store.