Since I stopped being a hardcore PC gamer about 4 years ago, the desktop had to go. My first notebook was an Inspiron 6000D with a 128MB X300. I played a lot of stuff on it and it was great. Sure you don't get super fancy graphics, but I'm generally more interested in the actual gameplay.
My MBP with it's 128MB GF8600GT-m is a huge leap and plays anything I throw at it now. Currently playing the RA3 beta. Again, I can't play with everything turned up but I just don't care.
My wife has been using laptops for about 5 years now. She has hers and I have mine. We have two desktops in the house, one Vista MCE box that is the full-time DVR in the house and another less powerful box that i do BT on so I don't clutter the HTPC.
Most people greatly over-exaggerate their needs and think they HAVE to have a desktop. While there's definitely still a market segment for it, the ability to take your laptop everywhere you go (and I do) greatly outweighs any benefit you get from a desktop, unless you have a specific need for it, IMHO.