I'm an avid book reader and when I was younger we didn't really purchase too many books since our house would be overrun by now.
But we used the local library and used paperback and hardback books.
If we did purchase books I would pick up whatever format they had, but if the paperback was available I would get it because not only was it cheaper, but with a hardcover it gets annoying with the jacket they put around them. I would most likely rip and/or toss the jacket since it's so annoying.
But like you mentioned, this day and age I believe we have strayed away from physical books. Yes, there are people that still go out to buy books. I believe it's more older generation that will do this since they've grown up on buying books, sometimes you get nostalgic and just want to hold something, and their somewhat resistance to new technology. I even buy physical books from time to time just to have something to hold on to and the book smell.
I'm not saying all older generations wouldn't try new technology and ebooks, but I think they would be more resistant and have a harder time, in my opinion. Also, from the library angle, since the economy is still recovering people may just want to go to the library and pick up your book instead of paying for it in the store or online.
I would think, if you are going to publish a book, I would do it in the Ebook format. So many people are buying ebooks because it's easier to keep track of (on your devices), most of the time they're cheaper (some still are $10+), and I believe it's easier to peruse books and get more information about them in the e-format and research online rather than trying to read the back of the books in a store and hoping it's a good book. They actually have reviews that really help people decide if they may like the book.
So, since I read so much, I would think you may want to release your book online at first. Get a feel on what people think about it, etc. Then if it gets popular you could release paperback books that can be purchased by libraries also.
Hope this was helpful.