I like digital distribution. The only issue I have with it is that in Australia we have pretty shit broadband and these come with some equally crappy download caps. I only get 25 gigs a month and I used 2 of that yesterday buying Galactic Civilizations 2. I can't imagine what I'd be looking at downloading if I wanted to play more recent games. This is also why I will not be adopting pure online services like OnLive.
Also, it's generally cheaper. Sure, I can't onsell the games or let my friends borrow them, but that doesn't really bother me because I didn't often do that with PC games anyway. And to be honest, a bunch of my old CDs are lost or ruined now. I'm fortunate I registered my copy of GalCiv 1 with Stardock because when I installed Impulse on my new computer I was able to redownload it free of charge.
For console games I prefer the disc collection, but for console games it just seems more convenient that way, especially on a console like the 360 where you pay a premium for anything resembling decent storage space. If I had to download full retail games to my 360 I'd only be able to have one installed at a time.