It's a totally awesome way to shop for and buy games. I was one of the first people to use Steam, and Half Life 2 was the first game I ever bought a download of. It's got a nice clean interface, it's not a resource hog, and unlike a lot of digital distribution systems it does not require you to be logged on to the internet to play games you downloaded. It's convenient enough that I felt it worthwhile to buy the Civilization 4 collection when it was marked down to something like $15 on special, even though I already had Civ 4 - I just liked the idea of not needing the disc and being able to redownload a copy on a new computer when I get one.
I haven't bought a physical copy of a game for PC in a long time - I think it was the first Fable. I've bought dozens of games through Steam. I've also got a lot of great deals, sometimes they will have a short special where a game is marked down significantly, and sometimes free. I downloaded Portal for free just the other day.