The biggest problem with IGPs is that they have to use system memory. Software rendering has the same problem. AGP texturing and TurboCache etc already show that even the fastest GPUs screech to a halt as soon as they have to use low-bandwidth system memory.
You also see that laptops with faster graphics chips get dedicated graphics ram, which ofcourse drives up prices.
So if you want to get a cheap solution, you can't use fast memory. In which case I don't think software rendering can ever win from a dedicated IGP. The cost of a modern IGP is negligible. Just compare prices of the same motherboards with and without IGP. On the other hand, the IGP relieves the CPU of rendering tasks, and does this very efficiently. Running SwiftShader on a laptop is not good for battery life, and will also generate far more heat, making the laptop noisy even when just doing basic desktop operations.
You also have to realize that no IGP means that the CPU will have to take over ALL rendering. Especially with Vista Aero that means you'll be doing texturing operations all the time (with filtering and alphablending for many effects). My laptop with a X3100 has no problem doing that. I think SwiftShader would not only make the desktop run sluggisly, but also bog down the CPU as a whole. I think it would be similar to how Windows XP runs before you have videodrivers installed, and it runs with the basic VESA driver, and the CPU has to do all window drawing.
So will we drop IGPs in favour of software rendering? No, I don't think so. IGPs are more cost-effective and deliver a better user experience.
In fact, IGPs have just started to pick up speed with the AMD 780G. They are starting to make use of the fact that DDR2 800 and 1066 are now very affordable, and can go in standard budget PCs. And DDR3 will increase the bandwidth even further. So AMD just made a leap in IGP performance, and I'm quite sure that nVidia will follow. Intel will probably get in the game aswell, when Larrabee is a success, and their first IGP based on Larrabee is introduced (I don't expect the 4000-series to make that leap yet, they're too similar to the 3000-series).