Indeed, think I made the comparison a while ago, as have others, GPU integration is just another logical step. First there were CPU’s as integer processors, later came dedicated FPU’s, the FPU’s were then integrated into the CPU. Graphics demanded massive parallel processing, 3D graphics requires floating point operations for efficiency, making GPU’s massively parallel FPU’s. GPU’s get bigger and better, then smaller and smaller, and now they’re being fitted back into the CPU again.
Dedicated cards aren’t going anywhere though, you simply can’t fit both a full CPU (even if it’s cut back to remove duplication) and a full GPU on the same chip, with the accompanying memory while having it operate at a sane temperature. Having shared memory has it’s advantages, but that means you can still thrash the memory controller with specific tasks, starving other operations, etc, etc, it’s swings and roundabouts.
Dedicated Graphics cards will probably have two major purposes in 5 years time – High end Gaming and HPC, both will probably carry the appropriate price premium. For everyone else, e.g mainstream, integrated graphics will probably be able to handle 90% of the games out there, since by that time, most will be console ports. Games consoles will be due a hardware refresh by that time, they get released, new graphics, pushes the envelope, demand for dedicated PC gaming cards increases, and the cycle starts again. Services like on-live might take off by then, but I seriously doubt that the state of the worldwide Internet infrastructure would have significantly changed by then, since those services are dictated by latency, not bandwidth, and latency rarely changes at all.
I guess we should stop calling them graphics cards as well - AMD started to call them APU's or Application Processing Units or something, but I believe that was in regard to their Fusion chips.
If there wasn’t a demand for dedicated hardware, we wouldn’t have Creative, Asus and Auzentech releasing dedicated soundcards after all these years of integrated audio.