Download only will happen eventually for consoles. It already exists with IOS and Android apps/games - funny enough, no one seems to complain about them.
But I do like physical boxed copies of games solely for the artwork etc of the boxes and having something physical to own and display.
As for the Xbox possibly needing to be always online, I get the feeling that was not a accidental leak or slip up. I think they were feeling out peoples feelings on the matter. I think they have their answer, I'd be surprised if they launched with a system that needed to be a always online.