I'm mildly disappointed that it'll be LCD just because I find eInk to be the coolest tech around.
However, I'd be shocked if they scrapped their highly successful e-ink Kindle, so worry not. (I also prefer e-ink; my Nook Touch is one of the best products I've ever owned.)
There was another big thing that happened, 11,000 public libraries using Overdrive get to lend books to Kindle users now.
I think the above rumor, and the recent support of the Kindle with Overdrive enabled libraries are one and the same.
That said, I don't see Libraries disappearing anytime soon. If these are different rumors, then let's take the rumor that free lending of books via Amazon Prime. I read somewhere (it may be in that article) that it may be a back catalog of older books. Classics and things. Public Libraries using Overdrive have some selection of newer books that Amazon Prime would then not be lending users.
That means if you're interested in newer books, well, your only option is to purchase the book (digital or dead tree) or borrow it from the local library (digital or dead tree). Since Amazon wouldn't be lending newer releases.
In addition, I still like the feeling of holding a REAL book. It lacks the search features I love, yes, but it's simpler to reference without hogging system resources, taking another device, or having to continually switch between monitors/desktops.
95% of the reason I bought my Kindle was because it has an eInk screen.