I dunno...satellite radio is definitely going to change the face of broadcasting, but there are a few reasons why I can't see it killing off AM and FM entirely.
For one thing, not everybody's into the idea of paying for radio. Even as intrigued as I am by satellite radio and as much as I'd love to rush to The Source the day the radios go on the market, being off on disability right now I just don't have the money to spare. And some people do have the money, but just won't be amenable to paying for something they currently get for free.
Secondly, there's still a need for local information, local weather forecasts, local traffic reports, local news headlines, local event announcements, and on and so forth. Sirius and XM in the States have local traffic/weather channels, but the current Canadian license actually disallows the Canadian operations from launching similar services. This may change in the future, but as it stands right now, even if I do subscribe to Sirius I'll still have to turn to a local AM or FM station to find out whether there's a traffic jam on the 401.
I could see satellite ultimately wiping out music stations from the conventional broadcast bands, but there's probably always going to be a place for local radio, albeit in a different format.