iPhone cutting into laptop use

Cyrus Farivar from Salon points out an interesting new development in the proliferation/evolution of smartphones: users get so much utility from them that they're leaving their laptops at home. From the Wall Street Journal:

These souped-up cousins of ordinary cellphones, with email and other Internet functions, have become much more powerful in the past year. So powerful, in fact, that they can handle nearly every computing chore that many business travelers need to do, from checking warehouse inventory levels to watching movies on airplanes. Best of all, users can do those tasks with a pocket-size gadget that weighs a few ounces, instead of a five-pound hunk of plastic that goes into a shoulder bag.

The result: Many travelers are now using smart phones the way they once used laptops -- and laptops the way they once used desktop computers. Mobile workers rely on their laptops to create PowerPoint presentations and do other heavy-duty computing. But then they leave the laptops in their offices, homes or hotel rooms and take their smart phones out into the world -- to client meetings, say, or factory visits.
...
...And it's clear that a sizable number of users already are starting to see their smart phone as a replacement for their laptop for at least some of their needs. In a survey of 460 iPhone users from March by Rubicon Consulting Inc., more than 28% of respondents strongly agreed and 29% mildly agreed when asked whether the iPhone was replacing their use of laptops.

I know there are at least 2 iPhone users who frequent this site and can comment on their experience. For my part, I've had a related, though very different experience as I rely entirely on a home assembled desktop. About a month ago, I decided to look around for some upgrades since my computer is about 2 1/2 years old now, and I was shocked at what I discovered: aside from RAM, PC desktop technology has hardly budged an inch. Nearly all of the components I bought as not-quite-top of the line in early 2006 are still upper-mid level quality, and several of them are still selling for the exact same price! Even most of the video games topping the sales lists are several years old, and one of them (World of Warcraft) is 4 years old, an eternity for, say, console games.

That was when I realized just how deeply laptops and smartphones are cutting into demand. It appears that the advantages desktops provide-- cheaper parts, more power, upgradability-- just aren't what people are looking for (or in the case of power, laptops are fast catching up). People don't need or want the savings of integrating their computing needs into one powerful device if it cuts into their portability, so they'd buy a laptop for their work and writing, a phone for their basic internet use, and a console for games, even if that means a huge rise in expenditures. Of course, if you're not a gamer or video editor, there's no need for a powerful computer, in which case desktops have only their slowly decreasing cost savings to offer you.

I'm interested to hear that people are increasingly using their smartphones more than their laptops, though. We can already see the end of the road for the desktop computer: when laptop prices and power become comparable and consoles suck all the air out of the video game market. What effect will smartphones ultimately have on laptops, though? Will laptops keep getting smaller and smartphones bigger until the two merge? Will the transfer of information and your personal files/programs between the two become so seamless that you can drop your iPhone and sit down with your MacBook (or vice versa) picking up right where you left off without any active plugging in or file transferring on your part, as if your entire digital collection and all your actions exist in virtual space, and the two pieces of hardware are merely portals to it? Would people stop buying laptops if, say, Apple develops a little cloth foldout keyboard that you can use wirelessly with your iPhone?