The only ones who are talking about the desktop PC being dead or completely disappearing are enthusiast forums.
I think in reality what this looks like for Intel is sort of how Apple has had their line up for quite some time. Mainstream PC's will share processors with laptops/mobile devices, and the high end sector will share processors with servers/workstations.
They've already done it on the high end sector, all they need to do is kill off the mainstream desktop chips, declare mobile chips good/fast enough, and produce socketed versions. Alternately, motherboard AIBs will could sell all-in-one *ATX motherboards with the cpu soldiered to the board.
As primarily a desktop user this doesn't really appeal to me, but if that were to happen it's possible that the HEDT server/workstation chip segment might come down in price a bit if it becomes more popular with gamers.