Is the album dead?
I thought the album was dead when I started putting my music on the net years ago. I didn't even bother releasing an album until a few years later ("people just want to download mp3s!") but I was totally wrong.
I don't have much artistic or romantic attachment to albums but I do think there's a practical aspect to them. Assuming it's not one good song plus eleven songs of filler, I'd rather have 45 minutes of entertainment from an artist I enjoy than 3 minutes. It's the difference between watching one episode of a series versus the whole season.
But I don't see why it has to be exclusively albums or singles, it's the future now, they can co-exist! I think as budgets shrink, artists become more independent and audiences diversify and fragment, it's harder to decide or define what a worthy "single" is. That's what the filtration of the Internet is for, that's why file-sharing is awesome. The hits will bubble to the top.
Do you want each song to be focus-grouped before you get to hear it? An album's still a pretty good vehicle for putting out a batch of songs and seeing what spreads.