There are many reasons why the PSP Go failed, and the existence of the Vita means that Sony doesn't think it has much to do with the digital-only distribution. Sony is putting a lot of money into the hybrid PlayStation Vita, and that means they really believe in it as a viable product. More importantly, it means they are testing the waters to see if a future console that solely features digital distribution can succeed.
The only way to make a portable console even more portable is to eliminate the need to carry around games. Testing the waters of digital distribution with a handheld console is appropriate, but it's likely not going to end there. With the recent rise in sales on the Xbox Live Arcade and PlayStation Network, the message being sent by consumers is that they enjoy having software made available to them on demand. It's very possible that the next generation of home consoles will be digital only, or at the very least feature a much larger digital library than we see currently.
If you're like me, your multimedia life is digital already: my music library is on my PC, I stream movies more often than I watch DVDs, and I have bought my fair share of games from Xbox Live Arcade. The inevitable conquest of the virtual console is at hand, and your game discs will soon sit next to cartridges in a museum display. While this may please some of you, I will be dragged into this dark age of gaming kicking and screaming.