Twitter is pretty darn cool. The ability to publish brief updates to anyone who cares to receive them is a neat thing. I've been using it for months now, and am learning to use it as a kind of zeitgeist tool - I follow enough people that I can pick up on stories and trends via twitter rather than through other means.
But I'm finding that it just destroys blogging as a communications form for me. I'm an infrequent blogger anyway, for a variety of reasons, and giving me an outlet that forces me to be pithy and is expressly interpersonal and transient just encourages that.
Blog posts, for me, are something I craft. When I write anything longer than a couple of sentences, I revise and rethink, going over the sequence of things to make sure that it flows and is readable. I don't do that with Twitter (at least, I don't do it much) because there just isn't enough space to worry about it.
I don't think this affects everyone; I suspect it hits those who are primarily social bloggers much more than those who are journalists or creative writers.