The killer feature with downloadable music is (virtually) unlimited storage, and having your entire collection with you in one device. It won't be long before cars don't have CD players (it's 10 years since they dropped cassette players, and it was about 5 years while they had both). I would say iPod docks in cars are already ubitiquous - most car reviews in magazines will mention if there is one or not, and journalists usually moan if there isn't.
I also disagree with the thought that displaying in living rooms and swapping with friends is a feature. I put all my old CDs in a box years ago. It's only music tragics that want everyone to see their collection.
The thing is, the biggest consumers of music are young people. Try and find a 17 year old with a CD player. As this demographic moves through life, CDs will shrink into niche stores just like print films.