Yes. Not so much when at home but when I'm traveling I will always buy a paper. A broadsheet will give me an hour or two or reading – nothing comes close in value for money.
Papers have changed from the only source of written news (apart from Ceefax/ Teletext) to more of a features and analysis in the 20 years I have been reading them and I guess they will continue to evolve. The fact most papers put their content online and free at the same time it appears in print but people are still willing to pay for a newspaper suggests the vehicle has a lot of life in it.
As I see it, the two killer advantages for a paper are that you can read a newspaper anywhere (train/ ferry/ plane/ tube/ bed/ shitter/ pub/ with dinner) as it doesn't rely on batteries or a network connection, and it's a very easy format to browse through and dip in and out of.
At the moment The Independent has a good iPhone app that has a lot of the print copy in it – it syncs online and can be read offline – I suspect when eReaders become mainstream and do something similar but better then (possibly paid for) digital papers will start to appear, but I am struggling to see how the newspaper itself will go extinct entirely.