First, PhysX does run on CPU, meaning that ATI user can too enjoy things written in PhysX.
Second, no games use bullet, either PhysX and/or havok. The fact that ATI video card isn't designed to run PhysX but bullet, which isn't Nvidia's fault, ATI decided not to implement PhysX in there hardware.
Third, people tend to believe that CPU does physics fine, but that depends on how much physics are involved. PhysX, if implemented properly, can utilize all available cores, i.e. 8 threads on I7, but it won't execute on 4 cores effectively. It is best to assume their are 2 cores, or 4 for feature games. Of course a code that detects available cores and dynamically adjust the number of threads are ideal, but physics really isn't the only thing happening and such code is extremely hard to write.
PhysX will grow, as it has, simply because its performance can be increased with better video card while it still works without Nvidia card present. The part where PhysX affects gameplay is open for any video card, which runs off CPU and people somehow don't realize it. The only part where only Nvidia user can get and others can't, are those extra flying papers and smokes.
So Nvidia user have flying paper and ATI doesn't, so what? Nothing, it doesn't affect gameplay. That doesn't PhysX is useless. In fact, PhysX is more powerful than Havok because not only it can utilize CPU, but Nvidia GPU too. The question is, with DirectCompute, will MS favors Havok, allowing it to benefit from DirectCompute, thus it will also utilize GPU? Maybe, but not yet.
Look at it this way. We now have DirectCompute, will someone be smart enough to use it to recreate a set of API that does what PhysX does? It is possible. MS will probably do it, and call it DirectPhysics. However, the downside is it only works on MS, proprietary to MS. Will someone be smart enough to build a set of API under OpenCL that does what PhysX does? Yes, but not anytime soon as there are too many unknown bottlenecks in this case.
People tend to say that PhysX will not grow because it is proprietary to Nvidia, yet those people seems to forgot that "hardware tessellator" is proprietary to ATI, and yet tessellation became a standard in DirectX 11 as if MS created it. They don't have a problem that DirectX 11 is proprietary to MS, and never question why it doesn't work on unix based OS and mac. Some of these people believed that Mac can't play games because Mac sucks without having a sense of MS proprietary trick. However, MS is not to be blamed as Mac can build there own APIs that does whatever Dx does, but they didn't. Instead, Mac users have to relay on OpenGL.
So, is DirectX dying to OpenGL/CL? Will proprietary stuffs survives?