My local blackwells has had a similar service for a while. The trouble is they charge more for an on-demand book than an off the shelf one. I've never seen anyone use the service.
The University of Waterloo (Ontario, Canada) also has one of these. I'm not sure when it was introduced, but I think it was at the start of this term. Thankfully, it is cheaper than off-the-shelf books (at least the two or three titles I looked at were).
I remember hearing about this, and was hoping for the price to be about half what it is. This is a great opportunity for physical books, but it won't be all that feasible until the cost for the on-demand books are significantly cheaper.